Michael Noonan
Ireland's finance ministerReuters

Ireland is set to end a controversial tax scheme that helped save billions of euros for a number of influential multinational companies.

Sky news citing sources reported that Ireland's finance minister, Michael Noonan, will close the tax loophole known as "double Irish" as part of the country's next budget.

The tax loophole enables foreign firms to save big in taxes as they transfer income from an operating company in Ireland to another Irish registered company in an off-shore tax haven.

US tech giants Apple, Google, Microsoft and Facebook are thought to have largely benefited from the scheme. The companies will be granted a four-year window to adapt to change in rules, Sky added.

The development comes as the European Commission is probing tax deals between Ireland and iPhone maker Apple.

The European Commission's investigation reportedly found Apple to have benefitted from illicit state aid after it made backroom deals with Ireland's authorities. The company enjoyed a corporate tax rate of less than 2% in the country, where it has been operating since the 1980s.

Brussels has asked Ireland to review its corporate tax policies in favour of multinational companies. It is separately probing improper tax deals between Luxembourg and Amazon.

Tax avoidance by multinational companies has become a major headache for European authorities.

The G20 had earlier commissioned the Organisation for Economic Cooperation and Development (OECD) to come up with proposals to end such avoidance schemes.

The group previously recommended the implementation of the OECD/G20 Base Erosion and Profit Shifting Project (BEPS), which is designed to create a single set of international tax rules to end the erosion of tax bases and the artificial shifting of profits to jurisdictions to avoid paying tax.

The proposed BEPS project would help governments protect their tax bases and enhance predictability to taxpayers. At the same time, it would guard against new domestic rules leading to double taxation, unwarranted compliance burdens or restrictions to legitimate cross-border activity, according to the OECD.