The Government has moved to close a tax loophole used by so-called vulture funds to reduce tax bills. 

Minister for Finance Michael Noonan has published an amendment to Section 110 of the Taxes Consolidation Act.

He said concerns had been raised about aggressive tax practices by some Section 110 companies to avoid tax on property transactions.

Mr Noonan said "the proposed amendment targets the issues that have been raised and will ensure that the Irish tax base is appropriately protected". 

Speaking to RTÉ News, the finance minister said Section 110 was never intended to be used by people to avoid tax. 

He said: " ... it was brought in to give an added incentive to the financial services industry, which employs 38,000 people on the securitisation side which is where section 110 would operate.

"It employs about a 1,000 people, principally in Dublin. Closing the loophole will have effect from today."

Earlier, it emerged Revenue was aware in January of the widespread sale of loans by NAMA to companies which use Section 110 of the tax code to pay little or no tax in Ireland, according to documents seen by RTÉ News.

Correspondence obtained under the Freedom of Information Act shows that Revenue officials discussed what they said were "a lot" of NAMA loans being sold to so-called Section 110 companies.

Section 110 is under the spotlight after claims that it is being used by vulture funds to establish companies to buy up distressed property loans while paying little or no tax in Ireland.

In response to opposition pressure, the Government asked Revenue to examine the tax law to see if it is being abused by funds to make money on assets in Ireland without paying tax in this country.

The FOI documents show that Revenue was aware of the widespread use of Section 110 of the code by companies buying distressed property loans from NAMA - several months before the issue was raised in the Dáil.

Correspondence dating back to January reference what it says are "a lot" of NAMA loans being sold to Section 110 companies.

SPVs have bought assets worth €300 billion - Central Bank

Special Purpose Vehicles set up by these so called vulture funds have bought up assets worth around €300 billion, according to data gathered by the Central Bank.

The bank's Chief Economist Gabriel Fagan told an Oireachtas budget committee: "In the last year or so we have made quite significant progress in actually measuring the activities of these firms.

“We have done a major data collection exercise on Special Purpose Vehicles covering an area of a €300 billion balance sheet of these entities.

"So we are starting to try and get to grips with what is actually happening in this sector but it is early days yet.

"In terms of the policy, it would be an area that is outside my narrow remit of economics,” Mr Fagan concluded.