While the Ministry of Mines and Energy studies ways to modify the Financial Compensation for Exploiting Mineral Resources (Compensação Financeira pela Exploração de Recursos Minerais - CFEM), the Member States take their own measures to increase tax collection on mining. Following the examples of Minas Gerais, Pará and Amapá, the State of Mato Grosso do Sul has also created, by means of Law No. 4,301 of December 20, 2012, the Controlling, Monitoring and Supervision Tax related to the Research, Production, Extraction, Transportation and Beneficiation of Mineral Resources (Taxa de Controle, Acompanhamento e Fiscalização das Atividades de Pesquisa, Lavra, Extração, Transporte e de Aproveitamento de Recursos Minerários - TFRM).

As from March 21, 2013, the TFRM shall be due on the activities performed by individuals and entities duly authorized to perform the mining activities of research, production, exploitation and development of mineral resources held in the State of Mato Grosso do Sul.

The due value shall correspond to 11.5% (eleven and a half percent) of 01 (one) Fiscal Reference Unit of the State of Mato Grosso do Sul (?UFERMS?) (which is currently equivalent to R$ 17.63 (seventeen reais and sixty-three cents)) per ton of mineral free of tailing. The amount to be considered for the TFRM payment will be the one indicated in the declaration to the Mato Grosso do Sul?s Environment Institute (Instituto do Meio Ambiente do Mato Grosso do Sul - IMASUL).

It is also provided that the Executive Branch shall be authorized to reduce the TFRM?s rate in order to stimulate the production increase of mineral products and to encourage the implementation of projects related to the protection and preservation of mineral resources. In this sense, the rate of 11.5% (eleven and a half percent) of the UFERMS would be reduced to 5.75% (five point seventy five percent) in case the mineral resources are industrialized in the State of Mato Grosso do Sul.

Like in other States, in Mato Grosso do Sul, the intention seems to be to burden only the big companies. In this sense, TRFM shall not be charged from: (i) individual microentrepreneurs; (ii) microenterprises; and (iii) small businesses, as defined by the Federal Complementary Law No. 123, of December 14, 2006.

Furthermore, the State Register for Control, Monitoring and Supervision of Research, Production, Extraction and Development of Mineral Resources related Activities (Cadastro Estadual de Controle, Acompanhamento e Fiscalização das Atividades de Pesquisa, Lavra, Extração e Aproveitamento de Recursos Minerários (?CERM?)), in which taxpayers must register until the time limit that will be proposed by a specific regulation. The non-enrollment or delay in the enrollment shall be subject to fines of R$ 17,460.00 (seventeen thousand four hundred and sixty dollars) per infraction.

As a general rule, the TFRM shall apply to all substances. Differently from the other States, such as Minas Gerais, Mato Grosso do Sul have not restricted the tax to only certain minerals ? in principle, all minerals will be subject to the new tax. However, the regulation - to be promulgated, might bring further information.