How Do I Determine My Product’s HS Code?
What is an HS code?
The Harmonized System (HS) is an international classification system of 6-digit codes, used to categorize physical goods for Customs purposes. The HS coding system was introduced in 1988 by the World Customs Organization (WCO) and is now used by more than 200 countries as a basis for their Customs tariffs.
This shared system makes it easier for customs authorities to link different compliance and regulatory measures, as well as assess duties and taxes to be collected.
Why do I need an HS code?
HS codes are legally required when making an international shipment and must be used on the documentation throughout the shipment process (see Trade4MSMEs guide on Trade Documents).
A key skill for anyone involved in international trade is knowing how to ensure that the correct HS code is applied to goods at import, export or during transit. This is known as classifying the goods for customs purposes.
Knowing the correct HS code can help you avoid non-compliance penalties, border delays, or seizure of goods and denial of import privileges.
The correct HS code can also help you to know if your product is eligible for a duty reduction or elimination under a preferential tariff agreement. (See the Trade4MSMEs guide on Regional Trade Agreements and Preferential Trade Arrangements).
Incorrect classification of goods may also result in a customs fine or penalty, so it’s important to get it right.
To classify goods correctly, there are two essential factors:
- Know the product involved in detail
- Learn how to read the Harmonised Schedule in a structured and systematic way
What is the structure of an HS code?
The HS code is designed to give a numeric code for a description of goods. There is only one correct HS Code for every product, used in over 200 countries around the world.
The HS Code defines:
- The nature of the product,
- Its main characteristics,
- The type of product it is,
- Any unique features
You cannot change the HS Code of a product without making significant changes to the product itself.
There are approximately 5,300 different 6-digit HS codes, each describing a specific article, or group of related articles.
These HS codes are classified into 21 different sections. Each section contains chapters, which in turn are divided up with different headings.
The first 2 digits of each HS code refer first to the appropriate chapter, the next two digits refer to the appropriate heading within that chapter, and the last two digits refer to the subheading. These 6 digits combined, make up the code which is applied to an individual product.
“Oranges” are categorized in Section 2 (Vegetable products)
Chapter 08 for “Edible fruit and nuts; peel of citrus fruit or melons.”
Heading 0805 is for “Citrus fruit, fresh or dried.”
The subheading code for “Oranges” is 080510.
However, the Customs administration in each country can choose to add more digits to the 6-digit HS code, to further categorize products which fall within the same subheading.
Fresh oranges – 08051010
Dried oranges – 08051090
What are the different types of tariffs and how do I know the amount of duty for an imported product?
A Customs Tariff sets out the duties and charges affecting the import, export and transit of goods.
Different types of tariffs you may encounter include:
- Ad valorem tariffs: These are the most common duties and are calculated as a percent of the price of the good. The price of the good can either be determined as CIF (Cost, Insurance, Freight), which means it includes the invoice value of the good plus all other charges paid for insurance and transportation, or FOB (Free on board), meaning only the cost of the good (typically the invoice value) without additional charges included.
- Specific tariffs: These are calculated based on the quantity of an import, for example weight in kilograms of meat or pair of shoes.
- Mixed tariffs: These are a combination of both specific tariffs and ad valorem tariffs, with one being applied depending on whether a higher or lesser duty is preferred.
- Compound tariffs: These are a combination of both specific tariffs and ad valorem tariffs and take into consideration both the value and quantity of the imported product in assessing the tariff to be paid.
- Tariff-rate quotas: These allow a pre-determined quantity of a product to be imported at lower import duty rates (in-quota duty). Once the quota is met, all subsequently imported goods are charged at a higher rate.
Once the appropriate HS product code is determined, the corresponding duty can be obtained from online tariff portals of the importing economy or other web market access portals, including those published by multilateral agencies see Trade4MSMEs guide Tariffs and Taxes at the border.
The Global Trade Helpdesk provides an HS product finder that can help you identify your HS code. Additionally, some customs authorities may issue advance rulings for the classification of goods designating the appropriate HS code. Information about advance rulings is provided online by the UN’s Trade Facilitation Implementation Guide (TFIG).
Links to Supporting Information
Trade4MSMEs guide Trade Documents for Exports – Trade4MSMES
World Customs Organization (WCO): World Customs Organization (wcoomd.org)
WCO HS Code guide Harmonized System | WCO Trade Tools
Trade4MSMEs guide Tariffs and Taxes at the border
The World Integrated Trade Solution (WITS) information on Forms of Import Tariffs Forms of Import Tariffs (worldbank.org)
The World Trade Organization’s Glossary of the Tariff Analysis Online Welcome to TAO – Tariff Analysis Online facility provided by WTO
The Global Trade Helpdesk HS product finder Global Trade Helpdesk
The Trade Facilitation Implementation Guide (TFIG) guide to Advance Rulings Advance ruling (unece.org)
The Institute of Export and International Trade Exporting essentials: Customs classification and commodity codes – The Institute of Export and International Trade