Brazil to launch sin‑tax on alcohol, tobacco and sugary drinks in 2027

The Brazilian government plans to introduce the Imposto Seletivo, popularly called the “sin tax”, beginning in 2027 as part of the consumption‑tax reform. The tax will apply to products and activities judged harmful to health or the environment, including alcoholic beverages, cigarettes, sugary drinks, certain vehicles based on emission levels, mineral extraction, lotteries, sports betting and fantasy‑sports games. The Ministry of Finance says the measure is extrafiscal, aiming to lower public‑health costs – estimated at R$ 18.8 billion for alcohol and R$ 150 billion for tobacco – and to internalise environmental damages.

Regulation defining the specific rates must be approved by Congress; the government intends to forward the proposal by year‑end. The new levy will be added to the recently created Contribuição sobre Bens e Serviços (CBS) and Imposto sobre Bens e Serviços (IBS) and will replace much of the existing IPI. Rates have not yet been set, but the tax is expected to raise consumer prices for the affected items. Industry groups warn of higher prices, potential loss of margins, possible growth of illegal markets and job impacts, while accountants note new transfer‑pricing and compliance considerations.

The tax’s introduction is a key element of Brazil’s broader tax reform, which also seeks to simplify the tax system and adjust other consumption taxes.