Brazil proposes IPI bridge during transition to Selective Tax

A proposal awaiting dispatch

The Chamber record describes PEC 22/2026 as an amendment to the Transitional Constitutional Provisions Act governing the transition to the Selective Tax. Its current status is awaiting dispatch by the President of the Chamber; the record does not show committee assignment or approval. Presentation therefore does not change current tax treatment.^[1]

The proposed bridge addresses a timing gap

The Constitution reduces most Industrialised Products Tax rates to zero from 2027, retaining an exception for goods whose industrialisation is incentivised in the Manaus Free Trade Zone, and prevents cumulative IPI and Selective Tax. Separately, Provisional Measure 1,399/2026 provides that its 2027 Selective Tax rules produce effects from 2 February 2027. Those dates create a potential 1 January to 1 February transition issue.^[2][3]

Policy purpose is verified; precise drafting is not

The Finance Ministry says the proposed constitutional amendment is intended to extend IPI on goods considered harmful to health or the environment until the Selective Tax has full effect, avoiding a tax-free interval. That is the Government’s description of the proposal. The full PEC text was not accessible during this review, so no claim is made about precise product codes, final drafting or a proposal-specific commencement clause.^[1][3][4]

Model the transition without treating it as enacted

Manufacturers and importers of goods potentially within the Selective Tax regime should identify relevant product classifications and model the January 2027 transition using the law currently in force. The proposal creates no present IPI charge, return or systems change. Any operational change depends on constitutional approval and promulgation and must be checked against the final text. Businesses should keep the separate Manaus exception visible in that model and should not infer that every product described as harmful by policy statements will be covered by the final constitutional language.^[1][2][3][4]