Selective Tax 2027: see products that will be taxed

The federal government has established the rules and rates of the so-called Selective Tax (IS), popularly known as the “sin tax.” The measure, which is part of the reforma tributária, provides for the charging of products considered harmful to health or to meio ambiente, such as cigarettes, alcoholic beverages, soft drinks and certain vehicles.

The standards were published on Wednesday (4), in the Official Gazette of the Union, through Medida Provisória 1.399/2026. The collection is scheduled to begin on February 2, 2027, with gradual implementation throughout the first year.

According to the proposal, the collection of the new tribute could reach R$ 41.9 billion in 2027, as estimated in the Lei Orçamentária Anual Project (PLOA).

Which products will be affected by the new tax?

During the first year, the calculation of the Selective Tax will use as a reference, in most cases, the rates currently applied by the Tax on Industrialized Products (IPI).

The charge may include cars, aircraft, boats, cigarettes, alcoholic beverages and sugary drinks, including soft drinks. However, the percentages may change according to specific factors provided for in the regulation.

For vehicles, for example, the basic rates will be between 3.9% and 6.3%, with adjustments related to power, fuel consumption and environmental impacts.

Diesel-powered cars could have an increase of up to 12 percentage points, while models with characteristics considered more sustainable could receive reductions.

Drinks with higher alcohol content may pay more

One of the main characteristics of the new tax will be the differentiation of the rates according to the impact of each product.

In the case of alcoholic beverages, the higher the concentration of alcohol, the higher the taxation may be. The proposal seeks to establish a relationship between the potential for harm to health and the amount of tax charged.

For vehicles, aircraft and vessels, energy efficiency and environmental sustainability criteria will be considered.

Who will be exempt from the selective tax?

The measure also sets out situations where the rate will be reduced to zero.

Among the beneficiaries are vehicles purchased by people with disabilities, people with Autism Spectrum Disorder (ASD) and taxi drivers, in accordance with the conditions provided for in the legislation.

The tax will also be zero for certain sustainable vehicles, vessels and aircraft that do not emit carbon dioxide, in addition to vehicles destined for the Forças Armadas and public safety bodies.

For mineral goods mined, the rate will remain zero through 2027. The lottery will be taxed at 0.5%.

How will the collection work?

The Selective Tax will be charged only once on each good or service, preventing the repeated incidence along the different stages of the production chain.

The regulation also provides for mechanisms to balance taxation between products manufactured in Brazil and imported goods. Goods destined for export shall not be subject to collection.

The new tax forms part of the reforma tributária instituted by Constitutional Amendment 132, which also created the Contribution on Goods and Services (CBS) and the Tax on Goods and Services (IBS).

New rates will be discussed in 2027

The published rules will have a transitional character, with application expected until December 2027.

The Federal Government is expected to submit to Congresso Nacional, by May 31, 2027, a bill to establish the percentages that will be used from January 2028.

The Medida Provisória is already in force, but still needs to go through the analysis of the Congresso Nacional. (The information is from the Senate Agency)

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