Government Sends Selective Tax Provisional Measure to Congress

The federal government has sent Provisional Measure 1.399/2026 to the National Congress to regulate the Selective Tax. The new levy will apply to products such as vehicles, aircraft, boats, cigarettes, and alcoholic or sugary beverages. The primary goal is to discourage the consumption of goods considered harmful to health or the environment.

Collection is scheduled to begin on February 2, 2027, due to the ninety-day rule. The Ministry of Planning and Budget projects a revenue of R$ 41.9 billion from the tax during its first year of operation. To avoid revenue gaps in January, the government plans to extend the IPI levy on the affected sectors.

The regime established by the measure will be temporary and will last until December 31, 2027. During this period, rates will be adjusted based on current IPI values to maintain the effective tax burden. The Executive branch must submit a bill by May 2027 to define final and progressive rates starting in 2028.

The proposal provides for specific rates, such as 66.7% for cigarettes and 4.2% for beer, in addition to strategic exemptions. Vehicles intended for people with disabilities, sustainable models under the Mover program, and trucks weighing over 3,500 kilograms are exempt. Pickups, however, remain subject to general tax rules regardless of their weight.