The scheme, which costs the exchequer an estimated 100m a year in lost taxes, is to be scrapped under proposals in the Finance Bill currently before the Dail.

Ending the remittance basis of taxation is bitterly opposed by business leaders, who claim it will damage the ability of multinationals and IFSC companies to attract world-class talent to Ireland.

Because of the huge numbers involved, however, tax experts now believe the main beneficiaries of the tax break are thousands of construction workers, mostly from eastern and central Europe, who avoid Irish tax by keeping their money offshore. They included the Turkish employees at the centre of last year's Gama scandal, who alleged that the company was cheating on their wages.

According to sources, most of the pressure to end the remittance basis of taxation came from trade unions, which fear that the influx of foreign workers on tax-free wages is facilitating a socalled 'race to the bottom' in employment standards.

Foreigners must remain domiciled outside the country to qualify for the tax break, a requirement that does not preclude them working in Ireland for extended periods of time. They must also be paid offshore and keep the money offshore.

When these conditions are met, the expatriate workers need only pay Irish tax on the amount of money they remit into the country.

Despite intensive lobbying by business interest, finance minister Brian Cowen is committed to ending the tax break in the interests of fairness. On Budget day last December, he said the finance bill "will place all employees and firms, irrespective of nationality or employer, on the same tax footing when working in the State."

Interest groups, including the American Chamber of Commerce in Ireland, pressured unsuccessfully for the minister to change his mind.

"The remittance basis of income taxation is a key feature in the package of tax measures that have attracted overseas multinationals and their senior executives to Ireland, " it stated.