Brazil Sets the First "Sin Tax" Rates: The Selective Tax Starts on February 2, 2027, With a Transition Year
BRASÍLIA — Brazil's federal government published Provisional Measure No. 1,399/2026 in an extra edition of the Official Gazette on November 4, setting the first rates for the Selective Tax created by the country's tax reform. Popularly known as the "sin tax," the levy targets goods and services considered harmful to health or the environment and is meant to discourage their consumption. Collection is scheduled to begin on February 2, 2027, under transitional rules running to December 31, 2027; on the same day, the existing industrial products tax (IPI) on those products falls to zero.
The first rates vary by product. Cigarettes and cigarillos carry the highest rate, 66.7 percent (calculated on a base equal to 15 percent of the retail price) plus 3.50 reais per pack of 20; other tobacco products are taxed at 37.5 percent. Sugary drinks are taxed at 2.6 percent; malt beer at 4.2 percent; wines and other fermented drinks at 8 percent, vermouths at 12 percent and port and Madeira at 16 percent; distilled spirits at 24 percent and cachaça at 20 percent. Passenger cars have a base rate of 6.3 percent, adjusted for power, energy efficiency, safety and recyclability. Aircraft and helicopters are taxed at 6.8 percent, motor boats at up to 12 percent, betting and lottery contests at 0.5 percent, and extracted minerals such as iron ore, oil, natural gas and coal at zero for 2027.
The Selective Tax was created by Complementary Law No. 214/2025 with a closed list of seven taxable groups: vehicles; aircraft and vessels; cigarettes and other tobacco products; alcoholic drinks; sugary drinks; mineral goods; and betting contests and fantasy sports. Trucks are not on the list, and products outside the list are not taxed.
A provisional measure has the force of law from publication, but under Brazil's constitution a measure creating or raising a tax must be converted into law by Congress within the year of its issue to take effect the following year. Congress must therefore approve this measure by December 31, 2026, for the 2027 start to hold. The government must also send Congress a bill by May 31, 2027, setting the definitive rates to apply from 2028.
(Source: Agência Brasil)
Source: Agência Brasil
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Photo: 图：巴西利亚的巴西国会大厦（资料图）。Cayambe 摄，CC BY-SA 3.0，经 Wikimedia Commons。 / Photo: The National Congress buildings in Brasília (file photo). Photo by Cayambe, CC BY-SA 3.0, via Wikimedia Commons.
