Provisional Measure sets Selective Tax rates for 2027

Published on November 4, Provisional Measure No. 1,399/2026 establishes tax rates and supplementary rules applicable to the Selective Tax (IS) for the 2027 calendar year, to be implemented gradually.

Created by the Tax Reform, this tax is levied on products considered harmful to health and the environment, with not only a revenue-raising purpose but also as a means of influencing consumption.

Selective Tax rates

⚠️ The Provisional Measure takes effect on February 2, 2027, when tax collection begins.

The established rates will be temporary and will remain in force until December 31, 2027. During this period, the rates applicable to vehicles, aircraft, watercraft, tobacco products, alcoholic beverages, and sugary beverages will correspond to the current Excise Tax (IPI) rates, after the application of specific conversion factors.

Among the tax rates established are: 2.6% for certain sugary beverages; 4.2% for malt beers; and between 8% and 24% for various alcoholic beverages. Reductions are planned for small producers.

Cigarettes and cigarillos will be subject to a tax rate of 66.7%, plus a specific tax of BRL 3.50. Other tobacco products are subject to a tax rate of 37.5%.

Vehicles will have base tax rates of 6.3% or 3.9%, depending on their tax classification, taking into account energy source and energy efficiency, among other factors. Sustainable vehicles, watercraft, and aircraft equipped with technologies that do not result in direct carbon dioxide emissions will be subject to a zero tax rate.

For mined mineral resources, the tax rates are reduced to zero through December 31, 2027.

For betting pools, however, the tax rate was set at 0.5%.

Read more: Tax Reform | Federal Audit Court proposes an 11.3% tax rate for the CBS

Gradual implementation

The Federal Government must submit a bill to Congress by May 2027 to define the final tax rates, which are expected to take effect from 2028 onward and will, in fact, serve to discourage the consumption of goods and services harmful to health and the environment, which is the purpose of the Selective Tax (IS).

Support for Tax Reform Compliance

DPC is available to advise your company and assist with the process of adapting to the new requirements. Please contact us: dpc@dpc.com.br.