Selective Tax: the Provisional Measure (MP) with 2027 tax rates is expected in September — what tax and IT teams need to prepare now

Selective Tax Enters Decisive Phase: 2027 Rates Expected via Provisional Measure

After months of anticipation surrounding the design of the Selective Tax (IS), the so-called 'sin tax' of the Tax Reform, the timeline for defining the rates is becoming more concrete. The government of President Luiz Inácio Lula da Silva has decided that the Selective Tax rates will be sent to the National Congress through a provisional measure, seeking to ensure that the collection of the new tax can begin on January 1, 2027. The expectation is that the Executive Branch will send this provisional measure defining the IS rates applicable in 2027 to the National Congress in the first half of September.

Why the Date Matters for Those Operating Tax Systems

The deadline is not random. For the rates to take effect starting January 1, the bill needs to be approved and signed into law still in 2026, respecting the 90-day period required for tax changes. This creates a tight window: approval in Congress, presidential signature, and still the constitutional 90-day period before collection effectively begins. In practice, any delay in sending or processing the provisional measure puts pressure on the system parameterization schedule in October and November.

The use of a provisional measure allows the text to have the force of law from its publication, although it must later be reviewed by the National Congress, which increases the predictability that the percentages will be established before the start of 2027. For tax teams, this means that the percentages may start to apply even before the final vote — a scenario that requires constant monitoring of the published text, not just the legislative process.

Which Operations Are on the IS Radar

The Selective Tax will apply to vehicles, vessels and aircraft, cigarettes, alcoholic beverages, sugary drinks, mineral goods, and lottery contests and sports betting. For each of these segments, the technical design of the rates directly affects product registration, tax classification (NCM/CEST), and the management system's calculation engine.

One point that deserves extra attention is the alcoholic beverage sector. One of the sectors at the center of the discussions is alcoholic beverages, with a design under study that provides for two simultaneous rates — one specific, calculated according to the quantity of pure alcohol, and another percentage-based — which could result in differentiated taxation for beverages with higher alcohol content. This hybrid model (ad valorem + fixed value per unit) requires the tax system to be able to calculate the IS per liter of pure alcohol, not just by transaction value — something most Brazilian ERPs do not yet natively parameterize.

What the Government's Strategy Signals

The government is expected to send the provisional measure with the Selective Tax rates in September and initially intends to preserve the tax burden associated with the IPI, although the actual impact can only be measured after the rates for each category are disclosed. In other words: the initial logic is burden neutrality relative to the current IPI, at least for 2027. Initially, the provisional measure will only address the rates applicable in 2027, and the percentages that will apply starting in 2028 will be defined later — which indicates that the topic will return to the agenda in 2027, requiring ongoing monitoring rather than a single, definitive parameterization.

How This Connects to What Is Already in Production

The IS does not arrive in isolation. It adds to the set of IBS and CBS fields that have already been circulating on invoices since August, within the Tax Reform's testing period. The defined schedule provides for 2026 to be a testing period, with full collection beginning in January 2027, exactly when the Tax Reform takes effect. This means that the tax registration of products subject to the IS needs to be ready to receive, simultaneously, the IBS, CBS, and IS groups in the NF-e XML, with distinct calculation rules for each tax.

Checklist for the Tax and IT Team

• Monitor the publication of the provisional measure in the Official Gazette and map the rates by product category as soon as they are disclosed;
• Review the NCM registration of items potentially subject to the IS (cigarettes, beverages, vehicles, mineral goods, betting);
• Check whether the ERP's tax calculation engine supports a specific rate per unit of measure (ad rem), in addition to the percentage rate (ad valorem);
• Simulate the impact of the IS on pricing formation and margin, since the tax does not generate credit in the chain;
• Keep monitoring with the accounting department regarding the signing deadline and the effective start date, considering the 90-day period.

This content is for informational purposes only and does not replace guidance from your accounting team, who should assess the specific impact of the Selective Tax on your company's operations as the provisional measure's text is published. Want to discuss how to prepare your company's tax registration and processes for this and other changes from the Tax Reform? Talk to Edoo.