What are HS Codes?
HS Codes (Harmonized Commodity Description and Coding System) are numerical codes that describe the product that companies ship around the world. It allows participating countries to use a standardized numerical method to classify traded goods on a common basis for customs purposes.
The Harmonized System is utilized by 179 nations covering around 98 percent of world trade for the evaluation of customs duties and the assortment of statistical data. Products are classified into two categories, 21 sections, and 96 chapters by form and function. It will be updated by the World Customs Organization (WCO) every five years, the next being 2021.
HS codes will allow customs authorities of the importing country to determine the number of duties that have to be paid along with VAT (Value Added Tax) for this particular product. Declaring the wrong HS code could lead to an inaccurate tax declaration and identifying the right category can be a matter of debate.
These codes are also used to assess if there are other controls on the import of products, whether they need special examination and other requirements. For example when ODM export wooden products to Australia they are subject to fumigation or other controls and the HS code can flag this to customs.
How to identify your product’s foreign HS Codes?
At the international level, the Harmonized System (HS) assigns specific six-digit codes for varying classifications and commodities. Nations are allowed to add longer codes to the initial six digits for further classification.
The code starts with the Chapter, followed by the heading, and then lastly the subheading of which the item is categorized. Further subdivisions are made in individual countries and trading blocks according to their standards.
For example, Roasted Malt with the HS Code “11- 07- 2000”.
- Chapter = “11”
- Heading = “1107”
- Sub-heading = “110720”
To determine the codes, look-up tools in the foreign tariff database such as Customs Info Database can be used. Additionally, on the DHL website, the look-up tool is quite useful for checking the HS codes of a product. Always be careful when assigning codes to the product as these can get quite complex.
Classification Example – Knife
8465: Machine tools (including machines for nailing, stapling, gluing, or otherwise assembling) for working wood, cork, bone, hard rubber, hard plastics, or similar hard materials
8441: Other machinery for making up paper pulp, paper or paperboard, including cutting machines of all kinds, and parts thereof
8215: Spoons, forks, ladles, skimmers, cake-servers, fish-knives, butter-knives, sugar tongs and similar kitchen or tableware; and base metal parts thereof
8211: Knives with cutting blades, serrated or not (including pruning knives), other than knives of heading 8208, and blades and base metal parts thereof
7228: Other bars and rods of other alloy steel; angles, shapes, and sections, of other alloy steel; hollow drill bars and rods, of alloy or nonalloy steel
Looking to help figure out your HS code? Fortunately, the ODM team can help you by providing more information about shipping and its processes. Additionally, our product designers have vast experience in designing and creating new products for your business. Contact our team today to learn more about how we can help you grow your business from the initial stages such as Sketching!
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Frequently Asked Questions
Are import tariffs the only duties charged by the Customs Department?
No, in most countries, there are additional domestic taxes, e.g. sales tax, value-added taxes, or luxury taxes. They are classified as domestic taxes that are not discriminatory in nature and are not covered in most countries' FTAs.
What is the difference between HS Code and HTS Code?
In the United States, importing products by companies must comply with the Harmonized Tariff Code Schedule (HTS). Unlike the HS of using a 6-digit code, this system uses 10-digit commodity codes. The first six digits are based on the international HS, while the next four further distinguish goods in certain categories.
What happens if the wrong HS Code is used?
Incorrectly classifying an item can lead to non-compliance penalties, border delays, seizure of the products, or even a denial of import benefits. As the exporter of the products, you are answerable for effectively classifying them, and therefore you are liable. Because classifying is complicated this can be a risk.