Guernsey States says it is considering opting out of an EU tax law unless a loophole is closed. Gibraltar has failed to sign up to the European Savings Tax Directive which came into force earlier this month.
Guernsey intends to press the UK government to force Gibraltar to toe the line at a meeting of Crown dependencies next week.
Guernsey's director of finance sector development Peter Niven says suspending the directive would be a last resort.
He said: "All the financial institutions on the island have put into place the Savings Tax Directive and to suspend it would create an awful lot of work.
"First of all we've been advising them we're going into the directive, then we're advising them we're not going into the directive because of a glitch, and when we do go in we'd have to write to them again.
"It's a bit like the hokey cokey - one moment you're in the next moment you're out."
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