What is the coffee loophole?

The "coffee loophole" generally refers to the exploitation of tax regulations or trade agreements to import coffee, often roasted, into a country at a lower tariff rate than intended. This often involves classifying the coffee under a different customs code, or routing it through a country with a favorable trade agreement, to avoid higher import duties on roasted coffee.

The term is also sometimes used more broadly to describe situations where coffee companies utilize legal but ethically questionable methods to reduce their tax burden or operational costs, such as transfer pricing or tax havens. This can lead to lower prices for the company but at the expense of tax revenue for the country where the coffee is consumed, or lower payments to coffee%20farmers.