federal excise tax (FET)
A tax imposed on premium payments to offshore insurers: 4 percent on direct
premiums and 1 percent on reinsurance premiums. It was once relaxed for premium
payments to most offshore insurers/reinsurers in Barbados and Bermuda, but not
for long. It can be eliminated if the captive makes an election 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.
Links for IRMI Online Subscribers Only:
RF VI.A