A Jersey deputy has said a move to stop certain companies using Jersey to sell VAT-free goods is discriminatory.
Firms avoid VAT by basing CD mail-order operations in Jersey
Companies such as Tesco and Asda, which use the island as a post box to sell VAT-free goods such as CDs, would no longer be welcome under States plans.
But Geoff Southern said it is wrong that local-owned companies are not being given the same ultimatum.
Economic Development Minister Philip Ozouf said there is nothing wrong with helping local companies.
Under current tax laws shoppers do not have to pay VAT or import duty on goods brought in from outside the European Union (EU) that cost less than £18.
Larger retailers, such as supermarket giants Tesco and Asda, have taken advantage of the current rules to sell cheaper CDs and DVDs imported from places such as Jersey and Guernsey.
Mr Southern said: "Whether you are UK or Jersey based, you are importing goods wholesale and exporting them individually.
"We believe ministers are acting in an uncompetitive way to protect local companies."
Mr Ozouf hit back: "We will take decisions in our island for the protection of our local community."
Over the past 18 months, Asda and Tesco have launched offshore operations selling chart CDs from Jersey.
Asda and Tesco said they are merely offering the best deal for customers.