Until the draft has been officially approved by the Cabinet Mr Clerides said that he is unable to disclose any of the document's details but he could confirm that the document will have been considered by the OECD and agreed upon by both parties early on in 2001, with implementation of the plan due in 2003.

The document - Cyprus' insurance for being kept off the OECD's 'harmful tax haven' blacklist - is expected to harmonise offshore and onshore regimes and to introduce information exchange mechanisms into the banking sector.

Currently there are around 40,000 offshore companies registered in Cyprus, of which only 1,200 have a physical presence. Some analysts have predicted that the new measures will damage the economy because offshore companies pay around US$237m in tax each year.

However, the government is adamant that the economy will not suffer by arguing that Cyprus' success as an offshore financial centre is not solely down to its favourable tax status for offshore companies. This view is supported by Central Bank Governor Afxentis Afxentiou. At a national financial services conference last month Mr Afxentiou stated: 'These requirements are not contrary to the best interests of international business enterprises ... Cyprus' advantages are not just in the arena of tax and duty free. Cyprus has many advantages that should more than compensate higher tax. The long term interests of the international sector will be safeguarded in the best possible way.'