Coffee and Tea Tax
Indonesia's coffee and tea processing industry is a significant global exporter benefiting from a government policy framework that incentivizes downstream processing. The tax structure is shaped by a clear distinction: green bean exports face export duties of 5-10%, while processed products (roasted, ground, instant, extract) enjoy 0% export duty — a policy designed to drive domestic value addition. Coffee and tea processors must manage Article 22 export income tax based on their API status, 0% VAT on exports with input VAT refund procedures, and PPh 22 at 0.25% on raw material purchases from farmers. Roasters with farmer partnership programs face additional compliance requirements for the agricultural supply chain withholding tax. The industry also benefits from tax allowance incentives for new processing facility investments and regional investment facilities for processing plants located in designated development zones. The increasing global demand for specialty and single-origin Indonesian coffee products makes effective tax management essential for maintaining competitive pricing in export markets. Arunika Consulting provides specialized tax advisory for coffee and tea processors navigating Indonesia's agricultural export tax framework.
Important Note
Ensure coffee origin certificates (COO) comply with export destination requirements.
Tax Rate
22%
PPH TARIF-UMUM
Risk Level
Medium
Typical Turnover
IDR 5 Billion - 500 Billion per year
Tax Challenges
Export Duty Differential by Processing Level
Green coffee bean exports are subject to 5-10% export duty, while processed products (roasted, ground, instant, extract) are duty-free — processors must optimize their product mix for export.
Farmer Purchase Withholding Documentation
Coffee and tea processors purchasing raw materials from farmers must withhold PPh 22 at 0.25% — managing this across potentially hundreds of smallholder suppliers requires systematic processes.
Export VAT Refund for Processors
Export-oriented processors routinely claim VAT refunds due to 0% export VAT — efficient documentation preparation is essential for maintaining cash flow.
Certificate of Origin Documentation
Coffee and tea exports require certificate of origin documentation (SKA, Form E for ASEAN, specific FTA forms) to claim preferential duty rates in destination markets.
Specialty Coffee Export Compliance
Premium specialty coffee exports may have unique traceability and certification requirements (organic, fair trade, geographic indication) with tax implications for certification costs and premiums.
Our Tax Solutions
Export Tax Optimization
Strategic management of export duties — maximizing processed product exports (roasted, instant) at 0% duty while managing green bean export duty exposure for the remainder.
- Optimal export duty
- Downstream processing driven
- Improved export margins
Farmer Partnership Tax Management
Management of PPh 22 on raw material purchases from farmers and collectors with correct withholding rates, electronic documentation, and annual reconciliation.
- WHT compliance
- Good farmer relationships
- Minimal disputes
VAT Refund Fast Track
Structured input VAT documentation system for accelerated refund processing, including preparation of preliminary refund applications for low-risk exporters.
- Fast refunds
- Good cash flow
- Smooth audit
Tax Allowance Application
Support for tax allowance applications on new roasting and processing facility investments, including regional investment facility benefits for qualifying locations.
- Up to 30% tax savings
- Investment optimization
- Full compliance
Related Tax Regulations
PMK-34/2017
Coffee Export Withholding
Export income tax on coffee and tea
PMK-65/2021
Coffee Export Duty
Export duty based on processing level
PP 46/2019
Coffee Tax Allowance
Tax allowance for export-oriented processing
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Free Consultation via WhatsAppCoffee and Tea Tax Consulting Services Across Indonesia
We support clients in major Indonesian cities. Find a location-specific service page for your area.
Bali
Banten
Daerah Istimewa Yogyakarta
Jawa Tengah
Jawa Timur
Kalimantan Barat
Kalimantan Selatan
Kalimantan Timur
Kepulauan Riau
Riau
Sulawesi Selatan
Sulawesi Tengah
Sulawesi Tenggara
Sulawesi Utara
Sumatera Utara
Sumatra Selatan
Frequently Asked Questions
Are processed coffee exports subject to export duties?
No, processed coffee products — roasted beans, ground coffee, instant coffee, and coffee extract — are subject to 0% export duty. Green (unroasted) coffee beans are subject to export duties of approximately 5% (Arabica) or 10% (Robusta) under current PMK rates. This differential is a deliberate government policy to encourage domestic processing and increase the value of Indonesia's coffee exports.
What withholding tax applies to coffee purchases from farmers?
Purchases of coffee beans from individual farmers by processing companies are subject to PPh 22 at 0.25% of the purchase price (excluding VAT). If the farmer does not have an NPWP, the rate doubles to 0.5%. This withholding is non-final and becomes a tax credit for the purchasing company. The rate also applies to tea leaf purchases from farmers and collectors.
What tax incentives are available for coffee processing investments?
Coffee and tea processing companies investing in new facilities may qualify for: (1) Tax allowance under PP 78/2019 providing 30% net income reduction over 6 years, (2) Import duty exemption on processing machinery through Masterlist, (3) Regional investment facilities for processing plants in designated development zones including potential tax holidays and reduced regional taxes. Investments in specialty coffee processing capacity are particularly well-positioned for incentive applications.
How should coffee exporters handle VAT on export sales?
Coffee exports are subject to 0% VAT. The processor must maintain complete export documentation including PEB, bill of lading, invoice, and certificate of origin. Input VAT on raw material purchases, processing costs, and packaging is creditable and can be refunded through the VAT refund mechanism. Processors should apply for low-risk PKP status if eligible to access preliminary refund processing for faster cash flow recovery.
Is Arunika Consulting officially licensed as a tax consultant?
Yes. We are registered tax consultants and support clients with compliant, professional tax advisory and representation.
What should I do if I receive an SP2DK letter or tax audit notice?
Contact us early. We help analyze the risk, prepare supporting documents, draft the response, and assist discussions with the tax office.
How much tax saving can tax planning deliver?
It depends on your structure and transactions. We identify legal efficiencies, incentives, and reporting improvements without crossing into tax evasion.
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