Joseph Stiglitz , Nobel Prize laureate in economics, is an economist and professor at Columbia University. The opinions expressed in this commentary are solely those of the author.

Although they are "legal persons" and can fund politicians of their choice without limit, they don't have to be limited by time and, thanks to our outdated system of taxing global profits, they can easily shirk paying taxes.

While multinational companies can get away with paying little or no taxes, average workers have no choice in the matter because their income taxes are paid even before they receive their paycheck. And while big businesses can exploit tax loopholes and shift profits to offshore subsidiaries by employing sophisticated tax planners, small and medium-size businesses have little choice but to pay the full rate.

This week, the Organisation for Economic Co-operation and Development, or OECD, unveiled its package of reforms to the global tax system. This joint G20/OECD exercise is known as the Base Erosion and Profit Shifting Project, or BEPS. The BEPS Project is commendable: it is important to own up to the mammoth problem of tax avoidance and the outdated tax system its member countries have created. Just five years ago, a reform like BEPS would have been unthinkable. But after the financial shocks and revelations of widespread tax abuse by global companies, the G20 called on the OECD in 2013 to propose reforms to the global tax system.

Locating the problem

Getting the issue on the table and admitting the problem is a start. And the BEPS Project has made remarkable progress in addressing the problems. However, this is just the beginning, and one should not view it as a successful fix of the broken system of taxing global corporate profits. Although several of the reforms inch toward the project's goal of taxing profits "where economic activities take place and where value is created," there is much more work to be done and many more countries to be included in the conversation.

The proposed requirement under BEPS of country-by-country reporting to tax administrations of revenues, profits and taxes paid is an impressive step forward for transparency. However, the home countries of multinational companies will need to require their multinationals to file these reports. Moreover, country-by-country reporting will only be required for entities with revenues above $845 million and even then, these reports will not be made public.

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Another important set of reforms attempts to prevent avoidance of tax by contracting out important business functions, such as sales and distribution activities, to separate companies. If a company does business in a jurisdiction, it has tax nexus — and thus, its profits are taxable by that jurisdiction. However, as long as corporations are able to create infinite numbers of subsidiary companies, business operations can be artificially segmented to get around nexus rules.

Moreover, the strong lobby of the technology firms blocked inclusion of digital activities in the list of business operations that create tax nexus. New York state has a very simple and effective approach: tax related companies within the United States as single firms and companies that generate revenues over $1 million from New York are taxable — regardless of the type of business activity.

Overall, the biggest deficit of the BEPS Project is its inability to address the core problem of the global tax framework: the transfer pricing system. This system provides wide latitude for companies to move profits around the world toward low tax jurisdictions, using mythical prices. And the problems have only been amplified with the growth of intellectual and other forms of "soft" capital. Using the transfer pricing system for the allocation of profits originating in the different U.S. states would be absurd. But as globalization proceeds, doing so within the different states of the world is equally absurd. Yet the OECD attempts to reduce tax avoidance and make improvements in a flawed system studiously avoid addressing these fundamental issues.

Searching for solutions

The Independent Commission for the Reform of International Corporate Taxation , of which I am a member, has provided an alternative to these outdated rules by using the system similar to the approach of many of the U.S. states: tax multinationals as single firms by combining their global profits and then allowing each country where the corporation operates or sells goods to tax only the portion of profits attributable to the corporation's economic activity there.

In our declaration , we explain the defects of the current system, its inherent inability to cope with a globalized, knowledge-based economy, and how it works to the disadvantage of all countries, and especially poorer developing countries. Multinational companies should no longer be allowed to structure their business in multiple pockets around the globe that take advantage of low tax rates and accounting practices, which move money out of one pocket and into another through a simple stroke of a key. Although it is considered legal under the current rules, this kind of maneuvering affects the lives of real people as it drains public revenues that fund health care, law enforcement, education, infrastructure and other important public functions.

The 69th United Nations General Assembly at United Nations Headquarters on September 24, 2014.

Tax avoidance, whether by corporations or individuals, reveals the dark underbelly of globalization. While well managed globalization can increase global efficiency, it can also facilitate illicit activities, including tax avoidance, and these can distort efficiency and increase inequities around the world. We have come to realize that we need global solutions to these global problems, which can only be obtained with appropriate global governance.

At the United Nations International Conference on Financing for Development in Addis Ababa, Ethiopia, the developing countries and emerging markets expressed distrust, almost anger, at the United States and other advanced countries. Over the years, they have been told to open up their markets to multinationals with the promise that these firms would contribute to their growth, but the result was that these firms manipulated the books so as to avoid the most important corporate responsibility of all — paying their fair share of taxes.

Could the governments representing these multinationals be trusted to devise a fair global tax regime or will they use their power to devise a regime that advantages their own companies and taxpayers? The international community has already created a body — the United Nations — to address global issues of common concern, and certainly tax avoidance falls under this remit. That is why we believe that all countries should have a voice in creating global rules and that this conversation should take place within the United Nations.

As the BEPS Project outcomes are presented to the G20 finance ministers this week, reflection on the sufficiency of its outputs as well as global tax reform beyond BEPS is critical. Our world has been changed by globalization. It's time for smarter rules based on global negotiation, made in the interest of all. The BEPS Project should be viewed as a beginning, but just that. We need to go beyond it.