Tax experts responsible for the G20-led reform of international tax rules are discussing ways to bar corporations from using internal loans that bear no relation to their borrowing needs in order to avoid tax, the Observer reported yesterday.

The paper quoted Raffaele Rosso, an OECD tax expert working on measures to tackle aggressive tax planning, as saying that if new proposals are supported, "this will be the end of [tax-]base erosion and profit shifting using intra-group financing."

The move to close these types of devices comes after the Luxembourg leaks revealed last week how multinational corporations are using internal loans to reduce their tax bills in various jurisdictions.

Jim Clarken of Oxfam Ireland said "global agreement" was needed as the practice was having a "devastating" impact, especially on developing countries.

Speaking on RTÉ Radio's This Week, he said: "We estimate that every year over $100 billion is being lost in corporate tax revenue to developing governments.

“This global system that allows money to be shifted around to avoid demonstrating profits in any country is unfair to everybody.”

Meanwhile, the Sunday Times reported yesterday that the so-called LuxLeaks loophole had been largely closed off by the Irish Government in 2011.

A Revenue Commissioners spokeswoman said the 2011 Finance Act introduced anti-tax avoidance measures in relation “to the deductibility of interest available to companies on loans”.

This involved “more restrictive rules on loans made on or after January 21st, 2011, to ensure that the loans are used wholly and exclusively for trade purposes,” she said.