The 90-day deadline has passed without the Selective Tax law
The Selective Tax (IS), known as the sin tax, was created by Constitutional Amendment 132/2023 and established by Book II of Complementary Law 214/2025, in articles 409 to 438, with adjustments brought by Complementary Law 227/2026. It applies a single time to the production, extraction, or commercialization of goods and services considered harmful to health or the environment.
For the IS to take effect as early as January 1, 2027, the 90-day priority rule required that the law defining the rates be published by early October 2026. Specifically, for collection to begin on January 1, 2027, the proposal needed to have been submitted by October 2, 2026, in order to allow compliance with the 90-day period required for the entry into force of taxes subject to the 90-day priority rule. That date came and went without the provisional measure being issued.
Why the government decided to wait
According to specialized news outlets, on October 1, the government decided to issue the provisional measure (MP) with the rates only after the runoff election in November. The economic team advocated for publication still in September, but the final decision chose to avoid the political wear and tear of the issue on the eve of the election.
What is the practical impact on the calendar
The direct consequence is that the IS collection missed the legal deadline to publish the rates in time, and collection must now begin, in the best-case scenario, in February 2027 — or only in 2028. If the definition comes via provisional measure, there is also a second constraint: this MP will need to be converted into law by December 31, 2026 to take effect in the following year, or it will lose validity.
There is also a parallel legislative discussion: PLP 42/2026, which proposes to limit the rates to 5%, is moving through the Chamber of Deputies — a benchmark much more restrictive than the historical practice of taxes such as the IPI on some of these products.
The side effect on the CBS reference rate
The delay in the Selective Tax does not stand alone. Since the reform requires tax burden neutrality relative to GDP during the transition, the projected value for the Selective Tax enters into the calculation of the CBS reference rate, a task currently monitored by the Federal Court of Accounts (TCU). Without the IS rate finalized, the TCU is working with an open variable right at the moment it needs to approve the proposed CBS reference rate for 2027.
What can already be done, even without the rate
Despite the uncertainty about the percentage, it is already possible to move forward on the structural part. The scope of the tax has been defined since LC 214/2025: the exhaustive list covers tobacco products, alcoholic beverages, sugary beverages, vehicles, vessels and aircraft, extracted mineral goods, and lottery/betting competitions.
For this reason, the technical recommendation is to map the classification now, item by item. Experts advise that companies check how their goods fit into the categories set out in article 409, § 1, of LC No. 214/2025, based on their respective NCM/SH classification, as well as assess the risks related to tax documentation and tax liability. This classification work is what will allow the ERP to be quickly configured as soon as the rate is set, without having to race against the production calendar in December.
Points of attention for tax, accounting, and IT teams
- Review the product catalog by NCM/SH to identify what may fall under the Selective Tax, even without a defined percentage.
- Monitor the progress of PLP 42/2026 and any provisional measure after the runoff election.
- Keep an eye on the deadline for conversion into law by December 31, 2026, which may change the actual start date of collection.
- Monitor effects on the schedule for NF-e, NFC-e, and other electronic documents, since the IS has its own fields in the layouts being adapted to the Tax Reform.
- Assess the indirect impact on the CBS reference rate, currently under review by the TCU.
This content is for informational purposes only and does not replace guidance from your accounting or tax team, who should assess the specific classification of your business.
If your company manufactures, imports, distributes, or sells products potentially subject to the Selective Tax, it's worth aligning with your tax and IT team on the ERP configuration plan before the calendar turns over. Talk to Edoo to understand how to prepare your operation for this and other changes from the Tax Reform.
Selective Tax without a defined rate: what tax, accounting, and IT teams need to monitor now