Brazil's Ministério da Fazenda (Ministry of Finance) has finished the text of the provisional decree setting the rates of the Imposto Seletivo — the excise tax created by the country's tax reform — and intended to send it to Congress on Tuesday, after a meeting with President Luiz Inácio Lula da Silva. Collection is scheduled to begin in February 2027.
"The decree has already left the finance ministry. I should take it to the president today," Minister Dario Durigan said, according to Forbes Brasil. By late afternoon none of the sources consulted confirmed that it had reached Congress — only the intention to send it the same day.
What the tax covers
Created by the tax reform and governed by Lei Complementar nº 214/2025 (Complementary Law 214/2025), the Imposto Seletivo is the levy designed to make dearer what the state wants to discourage. Under the design the finance ministry took to the president, it applies to:
- cigarettes and other tobacco products;
- alcoholic drinks and sugar-sweetened drinks;
- certain vehicles, vessels and aircraft, on a pollution criterion;
- extraction of certain minerals;
- lotteries, betting and fantasy sport.
The per-product rates were not disclosed. What the ministry did make public were the figures for the CBS, the new federal contribution on goods and services: the calculations sent to the Tribunal de Contas da União (TCU, the federal audit court) point to a ceiling of 11.3% and a national average of around 8.5%. Durigan compared that with the previous government's reform proposal, whose rate, he said, was 12%.
The calendar, and why it needs a constitutional amendment
The transition has three steps. In January 2027, the IPI — Brazil's tax on industrial products — would stop applying to the affected sectors, and the government wants to avoid that gap with a constitutional amendment temporarily extending the tax for those segments. In February, the Imposto Seletivo starts to bite, respecting the constitutional 90-day interval between a rule's publication and its collection. The permanent model is due from 2028, and its final design will be debated in Congress through 2027.
Durigan said the affected sectors agreed to keep the current IPI burden on industrial output, with a rate adjustment to strip the state-level ICMS tax out of the calculation base. "I struck a deal with every sector hit by the Imposto Seletivo," he said. The minister also ruled out an immediate cut in the CBS rate on technical grounds: first, he argued, the exemptions and favoured regimes have to be reviewed — "that will give Congress the room to revisit the exemptions".
That is where the knot sits. The rate taxpayers end up paying depends less on this week's decree than on which exemptions Congress chooses to keep in 2027 — and every exemption preserved pushes up the rate for those who have none. The finance ministry says the combined CBS and IBS burden will come in below market estimates, but it has not published the number.
With information from Forbes Brasil, Brasil 247 and the newspaper A Crítica.
