The Pacific nations targeted by the OECD in its harmful tax competition crusade have been threatened with sanctions if they do not bow to the Paris-based organisation's demands by the end of July. Present at the Tokyo meeting were the Cook Islands, Nauru, Niue, Marshall Islands, Samoa, Tonga and Vanuatu.

Noting that the offshore industry contributes as much as eight to 10 per cent of gross domestic product in these small, developing Pacific nations and that this income was threatened by the OECD, a statement from the Forum said: 'Income from financial service supports government expenditure across all sectors, employment, activities of related industries, and the long-term economic growth of these small nations.'

The Pacific Forum Secretariat said it was attending the Tokyo meeting 'to recommit to good faith multilateral dialogue....' and argued for the development of a truly global international tax forum where the voices of the smaller offshore centres would not fall on deaf ears. It said: 'Such a forum would allow standards regarding the operations of offshore financial centres to be developed in consultation with affected parties and so have the full support of the international community....Forum members asked that the OECD agree to the same level of constructive dialogue with non-OECD members as it had given its own members.'

This is of course the line that had been taken by the jurisdictions at previous multilateral meetings with the OECD in Barbados and London.

OECD fiscal affairs committee chairman Gabriel Makhlouf, an official of the UK Inland Revenue, said in Tokyo that the OECD were hoping for the same thing - continued discussions. Mr Makhlouf said: 'At the end of the day, each country has a different tax system and we have to talk through details with each country. There is a problem of sovereignty and it is up to every country to decide if they want to join the club.'