On October 31, 2012, the government of Minas Gerais published Law no. 20414/12 allowing the State’s Executive Branch to offer a discount of up to 70 percent off the Mineral Resources Inspection Fee (Taxa de Fiscalização de Recursos Minerários - TFRM).
The full amount of this fee is equal to one Minas Gerais Fiscal Unit (UFEMG) for each extracted ton of crude ore. TFRM was created by Law no. 19976, of December, 2011, and regulated by Decree no. 45936. A controversy has since arisen in relation to its constitutionality and, as a result, this fee is being challenged in court.
The amounts of TFRM that remain unpaid by the discount date may be paid at the new rate. In this case, interest applies, but there are no penalties for arrears. Mining companies that have been paying TFRM at the full rate may set off the difference between the full rate and the discounted fee against future TFRM payments, including any fines for arrears.
In addition to this discount, the new law allows mining companies to deduct any amounts paid by way of Environmental Inspection Fee charged by the State of Minas Gerais (TFAMG) from TFRM payments.
On the other hand, the new law has revoked the exemption from TFRM formerly applicable to mineral resources used in industrial activities within the State of Minas Gerais. The other exemptions – applicable to companies with gross revenues equal to no more than 1,650,000 UFEMGs and mining in Northeast Development Agency (SUDENE) areas – remain in force.
The Executive Branch of the State of Minas Gerais still needs to adapt Decree no. 45936 to the new form of fulfillment of the tax obligations contemplated by the new law.