Surabaya, E Java (Antara Bali) - Coffee exporters in East Java province have urged the government to scrap 10 percent value added tax (VAT) on the commodity, arguing the tax can reduce the price of coffee bought from farmers.
"The policy to impose 10 percent VAT on coffee has the potential to lower its export volume," chief of the Indonesian Coffee Exporters Association (GAEKI) Hutama Sugandhi said here on Wednesday.
He predicted the volume of coffee exports from East Java would increase to 75,000 tons this year from 73,000 tons last year. Nearly 80 percent of the coffee exports would be robusta coffee. "The imposition of 10 percent VAT on coffee beans may harm farmers. Furthermore, large traders and exporters charge the VAT to suppliers or farmers," he said.
While the selling price of coffee came under pressure, coffee growers would be discouraged to take care of the existing coffee plants. Consequently, exporters would run short of coffee, he said.
The government has imposed 10 percent VAT on coffee since last year under circular of the taxation director general number 24/PJ/2014 to follow up on the Supreme Court's verdict number 70/HUM/2013 on VAT on farm commodities, he said.
Rudi Sukoyo, president director of coffee exporter PT Gemilang Jaya Makmur, said the imposition of VAT would reduce East Java's coffee exports by up to 25 perrcent. (WDY)
