Selective Tax 2027: MP 1,399/2026 Sets Rates by Product and Collection Schedule

Government publishes Provisional Measure unlocking the Selective Tax for 2027

After months of expectation, the so-called "sin tax" has gained official figures. Provisional Measure No. 1,399, of November 4, 2026, establishes the rates and complementary rules applicable to the Selective Tax (IS) for the 2027 calendar year, under the gradual implementation regime of the Tax Reform. The text was published in an extra edition of the Federal Official Gazette and is already in effect, although actual collection will only begin later.

Known as the sin tax, the levy on goods and services harmful to health and the environment begins to be charged as of February 1, 2027, due to the constitutional ninety-day rule, since the Provisional Measure was only published in November.

Rate table by category

The Provisional Measure uses the current IPI rates as a reference, applying specific conversion factors. Among the points of greatest interest to those who issue tax documents and need to adjust product records, the following stand out:

• Passenger vehicles: base rate of 6.3%, with reductions linked to sustainability: energy source and propulsion technology, energy efficiency, power, structural performance, and recyclability. For other listed vehicles, the base rate is 3.9%. Electric vehicles get a 2 percentage point reduction; diesel vehicles get a 12 percentage point increase.
• Cigarettes (except cigarillos): ad valorem rates plus a fixed specific rate of R$ 3.50.
• Lotteries (Mega-Sena, Lotofácil, Loteca, and similar): rate of 0.5%.
• Extracted mineral goods: rate reduced to zero until the end of 2027, while the permanent regime is still being debated in Congress.

The rule also provides for a zero rate for vehicles purchased by people with disabilities, people with Autism Spectrum Disorder, and taxi drivers, in addition to exemption for products intended for export. An important structural point for those designing calculation rules: the tax must be charged only once for each good or service, with no cascading effect throughout the chain, with tax equivalence mechanisms for domestic and imported goods.

Why collection only starts in February, not January

The tax reform designed the extinction of IPI starting in January 2027, but since the Provisional Measure on Selective Tax rates was only published in November, the constitutional ninety-day principle pushed the effective start of collection to February 2027. This creates a revenue gap in January for the affected sectors (tobacco, beverages, vehicles), which the government intends to cover with a parallel constitutional amendment proposal (PEC).

According to the Ministry of Finance itself, the agreement provides for the temporary maintenance of IPI for the sectors covered by the measure in January 2027, with Selective Tax collection starting in February of the same year. To enable this transition, the government also intends to submit a proposed constitutional amendment (PEC) to Congress to temporarily extend IPI's validity for these segments — a kind of one-month "fiscal bridge."

What can still change during the legislative process

The Provisional Measure is not final until it is converted into law. According to the official legislative tracking page in the National Congress, the deadline for amendments runs until November 10, 2026, the urgency regime begins on December 19, 2026, and the final deliberation deadline is February 12, 2027, ten days after the date the Provisional Measure takes effect. In other words: tax teams should monitor the text until February, since rates and exceptions may still be adjusted by Congress before conversion into definitive law.

Practical impact for those operating NF-e, NFC-e, and tax systems

For companies in the affected sectors (automotive industry, tobacco, beverages, vessels, aircraft, and prognostic contests), the recommendation is to start now auditing the NCM codes subject to selective taxation, review rate parameterization in billing systems, and map products eligible for reductions (people with disabilities, ASD, taxi drivers, exports). Since the Selective Tax is part of the same IBS/CBS testing environment already underway since 2026, it is expected that the IS field will be incorporated into electronic tax documents at the same pace as the reform's other adjustments — something to be confirmed in upcoming technical notes from the Joint RFB/CGIBS Act.

This topic runs parallel to another discussion this week: productive sector entities are questioning the 11.3% CBS reference rate approved by the TCU, requesting a review from the Senate before the final definition for 2027. Both debates reinforce the same message: the tax reform timeline continues to move forward, but with last-minute adjustments that require constant monitoring by tax teams.

This content is informational and does not replace guidance from your accounting firm. Before adjusting tax parameterizations, product records, or calculation routines, consult your accountant or tax advisor.

Want to keep your tax operations ready for Selective Tax, IBS, and CBS changes without last-minute surprises? Talk to Edoo.