Brazil sets 2027 alcohol tax transition with fixed selective levy at zero

Brazil’s federal government has set the transitional tax rules that will apply to alcoholic beverages bought by bars and restaurants for resale in 2027, and the industry group Abrasel said on Thursday, November 5, that the measure keeps the burden initially in line with the current industrial tax on those products.

The assessment followed the publication on Wednesday, November 4, of Provisional Measure 1.399/2026, a legal instrument that takes effect immediately but must still be reviewed by Brazil’s Congress. The measure establishes the 2027 transition for the new selective tax, known in Brazil as the Imposto Seletivo, which is part of the country’s broader tax overhaul.

According to the legal text cited by Abrasel and published by the Senate, the transitional rule for alcoholic beverages sets the specific component of the new tax at zero from February 2, 2027 through December 31, 2027. The percentage-based component remains in place. Abrasel said that combination means the first year of the new system should reproduce the tax burden now imposed through the IPI, Brazil’s federal industrial products tax.

For bars, restaurants and similar establishments, the issue is important because beverages account for a meaningful share of revenue and because operators often set menu prices and purchasing plans months in advance. Abrasel said the 2027 impact on the sector’s beverage purchases should be limited, since the selective tax is collected once at the industrial level and reaches restaurants through the purchase price charged by suppliers. In its view, replacing one tax with another at a similar overall burden should not significantly change beverage costs in the first year of the transition.

That is an industry assessment, not a measured change in operating costs. Abrasel did not present sales or price data showing an observed impact, and the group said the rule does not amount to an immediate increase for restaurants. The association also noted that the ordinary resale of beverages by restaurants does not by itself create a new direct tax collection event under this system, because the levy is charged earlier in the supply chain.

Paulo Solmucci, Abrasel’s president, said the government had delivered what had been discussed with affected sectors, giving businesses more predictability as they prepare for 2027. He also said the association is still studying details involving distilled beverages and cigarettes, especially after recent changes in the IPI and because tax design can influence the size of the illegal market in those products.

The measure’s publication answered a short-term question for food service operators, but it did not settle the larger debate over how these products will be taxed after the transition year. Abrasel said the main uncertainty now concerns the rules from 2028 onward. Under the current timetable, the federal government is expected to send Congress a bill by May 31, 2027 with the permanent selective tax rates.

On Thursday, November 5, Finance Ministry official Dario Durigan reaffirmed the government’s commitment to discuss those future rates with affected sectors, according to Abrasel. That matters for restaurants because any increase in beverage taxes can affect menu pricing, customer demand and staffing, even if the tax is not collected directly from the establishment itself.

The provisional measure is also being watched beyond the bar and restaurant trade because it may influence how producers, distributors and retailers prepare contracts and inventories for 2027. Businesses across the sector need to know whether supplier prices will stay close to current levels or begin to reflect a different tax structure. Abrasel’s position is that the transition published on November 4 offers a degree of continuity for the beverage market, at least during the first year.

The measure does not remove all open questions. Abrasel said it still needs a fuller review of how the system will apply to cigarettes and distilled spirits, and it warned that legal certainty and the fight against illicit trade remain relevant concerns in those categories. The group cited the illegal cigarette market as a security and public finance issue, although the main focus of its November 5 statement was the effect of the beverage transition on hospitality businesses.

For now, the practical message for Brazil’s bars and restaurants is narrower. The federal government has published a transitional framework for 2027 under which the fixed, specific part of the new selective tax on alcoholic beverages will be zero, while the percentage-based part will still apply. Abrasel said that setup broadly preserves the existing tax burden carried in beverage purchase prices and should limit disruption to the sector’s cost planning when the new rules begin on February 2, 2027.