Despite delays in the adoption of the European Union's savings tax agreement as a result of Italian objections, the ITIO argued, the principle behind the EU's decision to offer special treatment to certain countries - namely Austria, Belgium, Luxembourg and Switzerland - flies in the face of, and therefore threatens, the principles espoused by the OECD with regard to tax competition.

'The proposed EU directive ignores an OECD commitment not to favour its own members over small states,' the organisation argued.

In a letter to OECD Secretary-General Don Johnston released last week, ITIO Chairman Glenroy A. Forbes announced that:

'The ITIO rejects the OECD's preferential treatment of certain OECD and non-OECD financial centres. It also believes OECD countries should not impose sanctions on non-OECD members when they refuse to do so for OECD members,' adding that:

'We regret, too, that, in violation of international law and WTO rules, countries both within and outside the OECD are already taking discriminatory measures against small countries, including ITIO members, on the basis of criteria developed by the OECD.'

The ITIO is comprised of members from: Anguilla, Antigua & Barbuda, Bahamas, Barbados, Belize, British Virgin Islands, Cayman Islands, Cook Islands, Isle of Man, Labuan (Malaysia), Panama, St Kitts & Nevis, St Lucia, St Vincent & The Grenadines, Turks & Caicos and Vanuatu.