IPI Constitutional Amendment (PEC): what changes for beverage, vehicle, tobacco, and mining companies as 2027 approaches

A New Chapter in the Selective Tax Delay

The transition calendar for the Tax Reform has gained yet another adjustment. After the government missed the ninety-day deadline for setting the rates of the Selective Tax (IS), the Ministry of Finance began working on a Constitutional Amendment Proposal (PEC) to maintain the collection of IPI on certain products until the new tax actually takes effect.

(cite index="47-3,47-4">The Ministry of Finance is working on sending a Constitutional Amendment Proposal to the National Congress to allow for the temporary continuation of the collection of the Tax on Industrialized Products on certain products. (cite index="47-5,47-6">The discussion arises because the new tax cannot begin to be collected on the date originally planned, and with the postponement of the rate regulations, the government needs to find an alternative for the period between the planned end of IPI and the start of taxation under the Selective Tax.

Why the Ninety-Day Rule Stalled the Schedule

For the Selective Tax to take effect as early as January 1, 2027, the law (or provisional measure) setting the rates needed to be published by early October 2026, in compliance with the ninety-day priority rule. (cite index="46-6">For the government to be able to collect the new tax on the first day of 2027, the constitutional rule required the publication of a Provisional Measure detailing the rates by October 2, 2026. This did not happen, and (cite index="51-6">the provisional measure that will set the rates was not issued by October 2, the last day for the minimum 90-day interval between publication and collection to allow the tax to be charged on January 1, and it is now expected for late October or November.

It is worth remembering that, since it involves a Provisional Measure, there is still a second condition: (cite index="44-2">if issued as a provisional measure, it will still need to be converted into law by December 31, 2026, to take effect in 2027. In other words, even if the Provisional Measure is issued in November, Congress must approve it before the end of the year for the IS to take effect in 2027 — otherwise, collection could only resume in 2028.

The Fiscal 'Gap' and Why the IPI PEC Came Into Play

The impasse created a concrete revenue problem. IPI is already scheduled to drop to zero for most products starting in January 2027 (with the Manaus Free Trade Zone preserved), but the Selective Tax still cannot be collected on that date. (cite index="43-4,43-5,43-6">The estimated loss for federal coffers in January 2027 is R$3.82 billion, which corresponds to approximately 9% of the revenue projected for the year from the Selective Tax, and the extension of IPI acts as a bridge to avoid this shortfall in federal revenue during the transition month.

For this reason, the solution under study is to temporarily extend the collection of IPI on the same segments that would be covered by the IS. (cite index="43-9,43-10,43-11">The proposal does not involve a blanket continuation of IPI for all industry: the focus is on segments whose products will become subject to the Selective Tax, including manufacturers of cigarettes and tobacco derivatives, alcoholic beverages, soft drinks and sugary beverages, motor vehicles, aircraft, and mineral extraction.

No Fixed End Date — and This Changes the Risk Analysis

A recent piece of information deserves attention from those working with tax registration and TIPI: unlike the earlier versions of the proposal, which provided for an extension until January 31, the most recent trend is not to lock in an end date. (cite index="51-3">The federal government informed the private sector that it is considering proposing a PEC to Congress for this purpose, and the trend, according to government officials, is that the text will not set a date for the end of IPI in these cases. (cite index="51-8,51-9">The choice not to set a deadline seeks to neutralize the risk of further delays, including the schedule of the Provisional Measure itself, which must still be issued in 2026 to take effect in 2027, since the Selective Tax is subject to both the annual and ninety-day priority rules. The PEC has not yet been presented to Congress.

Mining Is Excluded from Taxation in 2027

One point already negotiated concerns mining. (cite index="39-1,39-2">In the negotiations, it was agreed that mining will have a zero rate for the Selective Tax in 2027, meeting a demand from the Brazilian Mining Institute, which argued that the tax could harm the competitiveness of Brazilian companies in the international market and effectively function as an export tax. For other products currently subject to IPI, such as white goods, the schedule remains unchanged: a zero rate starting in 2027, except for the Manaus Free Trade Zone.

Manaus Free Trade Zone: Distinguishing the Safeguard from the Extension

It is important not to confuse the transitional extension with the permanent constitutional safeguard of the ZFM. (cite index="38-3">The constitutional safeguard already keeps IPI active starting in 2027 specifically to preserve the competitiveness of industrialized products made in Manaus compared to similar products made elsewhere, in addition to the presumed credit mechanisms. The PEC under discussion deals only with the temporary continuation of IPI for items that will migrate to the Selective Tax, regardless of the specific rule for Manaus.

What Tax and IT Teams Should Monitor

• Publication of the Provisional Measure setting the Selective Tax rates — expected for late October or November, after the runoff elections on 10/25.
• Formal presentation of the IPI PEC to Congress and the eventual decision (or not) to set an end date.
• The deadline for converting the Provisional Measure into law by 12/31/2026, a condition for the IS to take effect in 2027.
• Impact on product registries (TIPI) and on e-invoice issuance rules for companies in the beverage, tobacco, vehicle, aircraft, and mining sectors, which may deal with residual IPI for weeks before transitioning to the IS.
• Possible technical notes adjusting electronic tax documents resulting from this transition, which tend to come at the last minute, given the recent history of delays.

This content is for informational purposes only and does not replace guidance from your accounting team, who should assess the specific impact of the Provisional Measure and the PEC on your segment. To keep up with these changes without missing deadlines and keep your tax filing always up to date, talk to Edoo.