BERMUDA and other low tax jurisdictions should get together to consider a legal challenge against the United States for interfering with their financial markets.

That is the advice from international tax law expert Bruce Zagaris, who has worked for 14 governments and published numerous papers on the subject of tax.

As US lawmakers consider legislation designed to dissuade American companies from incorporating in lower tax countries such as Bermuda, Washington-based Mr. Zagaris has suggested that the region should unite and fight.

Mr. Zagaris said: "Eventually they may have to challenge one or more of these sanctions in an international forum which would either be the International Court of Justice, the World Trade Organisation or the International Monetary Fund for unfairly blocking access to financial markets."

A bill passed by the US House of Representatives, if enacted into law, will bar American firms that established a corporate presence in Bermuda, Barbados, the Bahamas, Cayman Islands, the British Virgin Islands, Monaco, the Isle of Man and the Seychelles from receiving potentially lucrative contracts from the new Homeland Security Department.

The move was proposed by Democrat Congresswoman Rosa DeLauro as an amendment to the Homeland Security Act 2002 and her motion was approved by 318 votes to 110 last month.

Another measure approved by the US Senate would extend that proposal to companies doing business with the US Defence Department, which awards contracts worth billions of dollars annually.

Mr. Zagaris made his comments in an interview with the Barbados Business Authority. When contacted by the Mid-Ocean News, he confirmed that to be his view, but declined to say more.

Employed on occasion by several Caribbean countries as an adviser on international tax matters, Mr. Zagaris also criticised the US proposals in an extensive article on the International Tax Notes web site.

He described the proposed legislation as comprising "unfair sanctions" and as a "discriminatory action" that was based on "so-called tax haven status" as determined by Washington.

Pressure to stem the flow of US companies incorporating in Bermuda has mounted in the light of the Americans' expensive war on terrorism and the ensuing "patriotism versus profits" argument.

Earlier this year Democrat Congressman Charles Rangel tried to force through legislation to bring companies that had redomiciled in Bermuda back to the US.

Mr. Rangel's move, attaching the Patriot Tax bill to a tax measure the Republican majority wanted to pass, failed.

That came in the week after Finance Minister Eugene Cox travelled to Washington, DC, to lobby officials.

This newspaper faxed Mr. Cox questions on the views of Mr. Zagaris this week, but he had not responded by press time yesterday.