Brazil Publishes Selective Tax Rules That Import IPI Verde Car Formula

Overview

• The federal government issued Medida Provisória nº 1.399/2026 on Wednesday to list products and set alíquotas for the Imposto Seletivo, with the noventena pushing the tax to take effect in February 2027.
• For passenger cars the MP copies the IPI Verde method by starting from a 6.3% base, applying five adjustments for energy source, efficiency, power, safety and recyclability, and then multiplying the result by 1.21 so final rates can range from zero up to much higher levels.
• The MP grants zero rates for vehicles bought by people with disabilities or recognized for TEA, for taxicabs, and for models with an MDIC 'registro de versão sustentável' tied to the Carro Sustentável program, which previously excluded imported electric models for lacking local assembly.
• The government published specific rates for other goods too, including sugary drinks at 2.6%, beer at 4.2%, and cigarettes at 66.7% plus R$3.50 per pack.
• Lawyers, the OAB and industry groups warn of multiple legal and trade challenges over constitutionality, executive delegation and treatment of imports, and experts say missing regulation, IT changes and the need to convert the MP into law by December 31 create material risks for collection, refunds and litigation in 2027 while the Treasury projects about R$42 billion in revenue.