Politics · Brazil · 11 hrs ago
Brazil plans transition to new tax on products linked to health harms
Brazil’s government plans to send Congress a measure setting out the Selective Tax, created as part of the country’s tax reform.
The tax will replace the Industrialized Products Tax, known as IPI, and cover products including tobacco, alcoholic drinks, sweetened drinks, vehicles and minerals.
The government and affected businesses have agreed to keep the current tax burden in 2027, while the new tax’s rates are worked out.
One account says the new tax could start in February 2027 after a January extension of the IPI, while another says the new tax’s design will be discussed for 2028.
Health groups say keeping rates unchanged conflicts with the tax’s purpose of discouraging products harmful to health and the environment.
The government and Congress are expected to debate the tax’s design and rates, with discussions also linked to the new tax on goods and services.
Brazil’s government is expected to send a provisional measure on Selective Tax rates to Congress on Wednesday, November 4, after reports on Tuesday said it could be sent that day.
The government has agreed with affected sectors to maintain the current IPI tax burden during 2027 as a transition to the new tax.
Reports say the agreement would extend the IPI through January, with the Selective Tax taking effect in February 2027 after a 90-day waiting period.
The new tax is intended to replace the IPI and cover products including tobacco, alcoholic drinks, soft drinks, vehicles, aircraft, boats, gambling and extracted minerals.
Health groups criticized the plan to freeze tax rates, saying it conflicts with the tax’s public-health and environmental goals.
- Who
- Brazil’s federal government, led on this issue by Finance Minister Dario Durigan, and sectors affected by the tax.
- What
- The government is preparing a provisional measure setting Selective Tax rates, with a 2027 transition that preserves the current IPI tax burden.
- When
- The measure was expected to be sent to Congress on Wednesday, November 4, 2026; the tax is planned to begin in February 2027.
- Where
- Brazil; the measure is to be sent to the National Congress.
- Why
- To establish rates for a new tax created by the tax reform to tax goods considered harmful to health or the environment.
Brazilian government and affected businesses
ACT Promoção da Saúde and allied civil-society groups
2027 tax burden
Brazilian government and affected businesses
The government agreed with affected sectors to maintain the current IPI burden during 2027 as a transition.
ACT Promoção da Saúde and allied civil-society groups
The groups oppose freezing rates, arguing that harmful products should face higher taxes.
Implementation
Brazilian government and affected businesses
The government’s reported plan extends the IPI through January and begins the Selective Tax in February 2027.
ACT Promoção da Saúde and allied civil-society groups
The groups say the tax should be implemented with high rates as soon as possible to meet its stated public-interest goals.
Finance Minister Dario Durigan said the government expected to send the measure to Congress that day and described the transition agreement.
Durigan said the IPI would be extended through January, with the Selective Tax starting in February 2027.
Folha de S.Paulo reported that the measure was expected to be sent to Congress that Wednesday.
- Expected submission
- Wednesday, November 4, 2026
- Transition tax
- Current IPI burden maintained during 2027, according to the agreement reported by Folha de S.Paulo
- Planned start
- February 2027
- Waiting period
- 90 days
- Affected goods
- Tobacco, alcoholic drinks, soft drinks, vehicles, boats, aircraft, gambling and extracted minerals
- CBS rate
- 11.3%, as set by the Federal Court of Accounts according to Folha
5 sources
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What people are saying
A ideia que a gente tem é também, em acordo com os setores, uma extensão do IPI pra esses setores exclusivamente durante o mês de janeiro e a partir do mês de fevereiro a gente teria o início da incidência do Imposto Seletivo
Sociedade civil, governo e Legislativo devem atuar para que o interesse público prevaleça sobre os interesses comerciais e garantir que o imposto seletivo possa ser implementado com alíquotas elevadas o mais brevemente possível, cumprindo seu objetivo de promover saúde para quem mais precisa e salvar vidas