Federal Excise Tax (FET)

1. Taxes paid when purchases are made on a specific good, such as gasoline. Excise taxes are often included in the product's price. There are also excise taxes on activities, such as on wagering or on highway usage by trucks. Excise tax has several general programs. 2. A tax imposed on premium payments to offshore (re)insurers; 4% on direct premiums and 1% on reinsurance premiums. It can be eliminated if the captive: chooses to be taxed as a U.S. corporation, or if the transaction is not really insurance (i.e., not claiming premium deductibility) but argued to be a transfer of self-insurance reserves. (Definition Source: Towers Perrin)