Yunnan, Jiangsu and Shanghai Jointly Issue First Coffee Industry Tax Compliance Cases

At a Glance (China Coffee Network): According to the State Taxation Administration, in recent years China’s coffee industry has broken free from the limits of single-crop agricultural planting, with its industrial chain now covering raw-material cultivation, deep processing, brand operations, and offline stores, and extending into new business formats such as cultural-creative experiences, estate tourism, and influencer-driven commerce, making it a model of integrated development across the primary, secondary, and tertiary sectors. Statistics show that in 2025 the total scale of China’s coffee industry exceeded 218.1 billion yuan, with more than 550 million coffee consumers. The coffee industry is marked by scattered market entities, a long industrial chain, diverse business formats, and a strong cross-border dimension; operators must weigh differences in tax policies across stages, rules for deducting input value-added tax, and the classification of revenue types, so ensuring tax compliance has become an essential question for the industry’s sustainable development. To this end, the tax authorities of Yunnan, Jiangsu, and Shanghai have jointly released the first batch of typical tax-compliance cases for the coffee industry chain, focusing on the compliant operating practices of upstream, midstream, and downstream coffee enterprises so as to provide a reference for market participants.

According to the State Taxation Administration, in recent years China’s coffee industry has broken free from the limits of single-crop agricultural planting, with its industrial chain now covering raw-material cultivation, deep processing, brand operations, and offline stores, and extending into new business formats such as cultural-creative experiences, estate tourism, and influencer-driven commerce, making it a model of integrated development across the primary, secondary, and tertiary sectors. Statistics show that in 2025 the total scale of China’s coffee industry exceeded 218.1 billion yuan, with more than 550 million coffee consumers. The coffee industry is marked by scattered market entities, a long industrial chain, diverse business formats, and a strong cross-border dimension; operators must weigh differences in tax policies across stages, rules for deducting input value-added tax, and the classification of revenue types, so ensuring tax compliance has become an essential question for the industry’s sustainable development. To this end, the tax authorities of Yunnan, Jiangsu, and Shanghai have jointly released the first batch of typical tax-compliance cases for the coffee industry chain, focusing on the compliant operating practices of upstream, midstream, and downstream coffee enterprises so as to provide a reference for market participants.

Case 1: Pu’er Jinlu Coffee Co., Ltd. built a digital traceability closed-loop system to standardize the management of purchase invoices. As a key provincial-level leading enterprise, Jinlu Coffee has spent two decades deeply rooted in the coffee industry and once faced problems in purchasing fresh coffee cherries—”many scattered smallholders, and difficulty verifying invoices against goods.” To address this, the company brought purchasing, invoicing, and bookkeeping into an online closed-loop system, using digital management to resolve compliance pain points. On source control of invoicing, the company strictly enforces identity-verification rules for purchase counterparties, issuing purchase invoices only to individual farmers who grow their own fresh coffee cherries, thereby eliminating the risk of non-compliant invoicing at the source. On bookkeeping, it has simultaneously established a standardized, complete electronic purchase ledger that records key information—farmer names, ID numbers, and detailed addresses—transaction by transaction, achieving “one file per household, searchable and traceable.” In addition, the system electronically archives and retains purchase vouchers such as harvesting records, purchase weighbridge tickets, warehouse receipts, and bank payment proofs; drawing on key fields including transaction date, payment amount, and farmer identity information, it compares and consolidates these against bank payment flows and verifies them item by item, forming a “three-flows-in-one” traceability loop of “harvesting records—purchase vouchers—payment flows,” building a complete and compliant evidence chain so that every purchase transaction can be checked and controlled throughout the entire process. Over the past three years, the company has issued agricultural-product purchase invoices totaling 62.65 million yuan and deducted 20.72 million yuan in input tax. It has successfully entered into in-depth cooperation with more than 30 coffee brands, with annual sales exceeding 58 million yuan.

Case 2: Lincang Yunjia Coffee Co., Ltd. used a “4+1+3” purchasing-management model to consolidate the compliance foundation of its purchasing business. In the five years since its founding, the company has developed a coffee-planting base of ten thousand mu, with an annual roasting capacity exceeding 5,000 tonnes. Facing concerns over the difficulty of sourcing quality raw materials and non-standard financial accounting of purchasing, the company innovatively introduced the “4+1+3” purchasing-management model. The “4” means purchasing and warehousing on the spot, collecting farmers’ ID and bank information on the spot, paying for goods on the spot, and completing invoicing on the spot—an entirely open and transparent process settled immediately—forming a “four-flows-in-one” evidence chain of “goods, funds, invoices, and accounts” that ensures fund flows and business transactions are traceable and facilitates compliant deduction of input tax. The “1” means making centralized payments through a single corporate account at the same time, ensuring fund flows are clearly recorded throughout, so the company can uniformly account for fund receipts and payments and improve the accuracy and completeness of financial data. The “3” means the company’s three-tier joint-review system of procurement submission, preliminary financial review, and leadership re-review, which checks at every level to standardize the internal-control procedures for purchasing. Since 2025, the company has issued agricultural-product purchase invoices totaling 13.31 million yuan and deducted 1.2 million yuan in input tax. Over the years, by adhering to the “4+1+3” model, the company has further strengthened farmers’ trust and the stability of cooperation, and was rated A-level for tax credit in 2025.

Case 3: Yunnan Zhongfei Food Co., Ltd. used refined “separate-ledger” management of R&D material requisitions to improve both the accuracy of expense allocation and R&D efficiency. Since its founding, the company has been rooted in Yunnan’s coffee-producing regions and deeply engaged in the R&D and production of small-grain coffee. In R&D, the company strictly implements “ledger-based management” of R&D material requisitions. Every R&D requisition must be documented on an R&D Material Requisition Form, filled in and circulated separately from production requisition forms, with mixing strictly prohibited; by marking project numbers and intended uses on the requisition forms, it ensures material costs are precisely matched to specific R&D projects and prevents production costs from being confused with R&D expenses. Based on approved requisition forms, the finance department sets up an auxiliary R&D-expenditure ledger on a “one project, one ledger” basis, recording each transaction’s requisition date, project number, material name, quantity, amount, and voucher number, so that books match physical stock and records are verifiable. Through this closed-loop management, the response time for tracing material consumption has been cut from two days to within two hours; requisition records achieve consistency across “form, ledger, and physical stock,” and the ability to track R&D projects has been markedly strengthened. At the same time, requisition reconciliation has become a real-time online check, cutting cross-departmental error-related communications by about 90% and effectively freeing R&D staff from non-technical burdens. Clear, traceable R&D requisition records have provided complete and standardized supporting documentation for the company’s compliant application of the additional-deduction policy for R&D expenses; over the past five years it has enjoyed 4.9 million yuan in additional R&D-expense deductions and has been rated A-level for tax credit for two consecutive years.

Case 4: Kunshan Linguo Coffee Co., Ltd. improved its separate-line accounting mechanism for coffee beans to guard against risks in applying policies at the processing stage. Located in the Kunshan coffee-industry cluster in Jiangsu, the company produces about 250 tonnes of roasted coffee beans a year. To address the value-added tax rate difference whereby sales of green coffee beans are subject to a 9% rate while sales of roasted coffee beans are subject to 13%, and to guard against tax risks, the company clearly divides its business into two categories—green-bean sales and roasted-bean sales—and sets up two secondary accounts under the main business revenue and main business cost accounts respectively. Its inventory sheets separately record inbound and outbound data for the 9% and 13% products, with revenue, costs, input tax, output tax, inventory, and invoicing all accounted for separately and never mixed. In addition, the company has established a separate-line accounting mechanism covering the entire process of procurement, finance, and invoicing: procurement is split at the source, with green beans classified on warehousing as either “trading inventory” or “raw-material inventory for production” according to their intended use; the finance department builds a monthly agricultural-product input-tax ledger that separately calculates input tax for the 9% and 13% products; and at the invoicing stage, sales confirm the business type, finance issues invoices against the applicable tax rate, and two people conduct a double review. Meanwhile, the warehouse, procurement, and finance departments jointly carry out a monthly stocktake of both inventory categories to ensure books match physical stock. By proactively and precisely distinguishing categories, applying policies in a standardized way, and upholding a management philosophy of honest, compliant operations, the company has been rated A-level for tax credit for two consecutive years.

Case 5: Shanghai Laihaosi Technology Co., Ltd. built a full-cycle tax-compliance management system to ensure compliance across multiple business formats at the sales stage. As the operator of the domestic pre-packaged coffee brand “Lian Coffee,” the company is involved in multi-platform, multi-model business formats and has explored the establishment of a full-cycle tax-compliance management system featuring pre-warning, in-process control, and post-event verification. At the pre-stage, it adheres to the control principle of “business first, tax assessment”: before new business models such as livestream e-commerce and community group-buying go live, the finance department intervenes in advance to conduct tax-related assessments and clarify compliant handling paths; when major promotional campaigns such as “Double 11” and “618” are being finalized, it refines the tax-treatment rules for marketing methods such as coupons, spend-and-save discounts, and free gifts, preventing tax-related disputes at the source. In-process, relying on its ERP system and covering mainstream e-commerce platforms including Douyin, Tmall, JD.com, and Pinduoduo, it achieves digital, real-time control of tax matters: sales data are synced daily to the back end via interfaces, automatically completing revenue recognition and eliminating omissions in data entry and accounting errors caused by manual operations; for diverse marketing formats such as influencer collaborations and platform promotions, it specifies the cooperation entity, expense amount, and invoice status to ensure related tax-related business is handled properly. Post-event, it regularly conducts year-on-year and month-on-month analyses of the VAT burden rate, precisely identifies abnormal fluctuations and traces their sources, while tracking changes in the share of various costs and expenses and focusing on verifying the business rationality and tax compliance of items with abnormal growth, forming full-chain management of risk detection, cause analysis, and rectification. The full-cycle tax-compliance management system has further improved the company’s ability to prevent and control tax risks on the sales side and helped the brand take firm root in the industry; in 2025 the company declared and paid more than 9 million yuan in taxes and fees, and has been rated A-level for tax credit for three consecutive years.

“Along the way, from passively responding to risks to actively building systems, compliance has become our steadiest source of confidence,” said Zhang Jianguo, legal representative of Pu’er Jinlu Coffee Co., Ltd., with deep feeling. “Holding the line in our operations has earned us market trust and development opportunities.” Speaking of the future, Zhang Jianguo said Jinlu Coffee will continue to deepen digital compliance management, extend the traceability system to all partner bases, improve full-process internal-control mechanisms, and remain committed to honest tax payment and standardized operations, so as to safeguard the development of the coffee industry with higher-standard compliance building.

Yang Dongqin, president of the Yunnan Coffee Industry Association, said: “The key to tax compliance in the coffee industry lies in ‘whole-industry-chain compliance’; we must weave compliance awareness into every stage of the chain. We are gratified to see that a growing number of coffee enterprises have shifted from passively responding to actively building compliance systems. Yet the association’s responsibility goes beyond serving its members: it must keep promoting industry self-discipline, standard-setting leadership, and public advocacy, and guide the entire industry toward being standardized, honest, and sustainable.”

Professor Yuan Jiao, head of the Fiscal and Tax Department at the School of Public Finance and Administration of Yunnan University of Finance and Economics, said that the long industrial chain and diverse business formats of coffee mean its tax compliance must run through the entire process of planting, procurement, processing, trade, and retail. At present, many domestic coffee enterprises have gradually shifted from passively coping with tax inspections to actively building compliance systems, internalizing “tax compliance and honest tax payment” as a core corporate competitiveness through digital tools, organized processes, and industry coordination. Looking ahead, as competition in the coffee market shifts from “scale expansion” to “intensive, refined cultivation,” tax-compliance capability will become the key support determining whether an enterprise can go more steadily and further, further driving the coffee industry’s transformation from extensive expansion toward refinement, branding, and internationalization, and better achieving high-quality industrial development.