The Taoiseach has played down recent claims that a legal loophole is allowing building developers to evade tax, costing the exchequer up to €250 million a year.

Labour Party leader Eamon Gilmore told the Dáil this morning that a licensing arrangement whereby builders acquire land but do not formally own it is allowing developers to escape tax.

-- Advertisement --

The loophole - which is reportedly used in 40% of all land deals - enables developers to avoid paying stamp duty through a series of financial manoeuvres when purchasing.

The technicality, known as the "s.110" arrangement, is also used by local authorities.

However, in response to Mr Gilmore, Bertie Ahern said a recent report recommended that incentives had to remain in place to encourage housing development.

A previous government decision to close the loophole was reversed by Finance Minister Brian Cowen who said that it could affect the property market negatively.

(VB/JM)