HS Codes & Custom Tariffs Number Definition With Extensive Details & Awesome Examples

What are Harmonized System Codes?

HTS / HS Codes, also known as the “Harmonized Commodity Description and Coding System,” or commonly known as “The Harmonized System,” are a standardized international system to classify globally traded products.

HS code is a terminology used for the classification of products, valid in all countries worldwide. It helps customs in different countries to make sure they are talking about the same product. Import taxes in countries are determined according to the HS code. HS code is a six-digit code system created for grouping and categorizing exported goods. This structure has been created according to the internationally Harmonized Commodity Identification and Coding System managed by the World Customs Organization in Brussels. US specifics Harmonized System Nomenclature code is expressed in 6 digits. It is based on a six-digit code. All states that are members of the World Trade Organization use the Harmonized system based on a 6-digit digital code.

What is Harmonized System (Tariff Schedule)?

The Harmonized System displays approximately 5,000 commodity groups in simple six-digit codes. 5000 products included

It consists of 21 chapters and 96 chapters in the Harmonized System (Tariff Schedule). Chapters are divided into two codes, each chapter is divided into 4-code positions, and each position is divided into subheadings with 6-code regulations. The 2, 4, and 6 codes in each country’s tariff schedule are the same all over the world. In the Harmonized System, countries can detail the sections after the 6-code according to their own needs (to get detailed statistics and apply customs taxes on a more detailed product basis).

What Is HTSUS: The US System

The Harmonized Tariff Schedule of the United States (HTSUS) 1 classifies goods based on various attributes, such as product name, product usage, or material in its makeup. The HTSUS schedule consists of “99 chapters” and also a variety of appendices. In the USA, the HTS classification is a 10-digit number. The first six digits are internationally (harmonized) last four digits are specific, consisting of The US tariff rates and the US statistical reporting.

HS code list and customs tariff code

Millions of shipments occur between countries every day. Some of these are express courier shipments, consisting of a few kilo packages. Some are delivered by trucks, some by ships, train, or plane. A container full of freight or a small package, all products you send, are identified with HS Code coding at customs points.

The main reason for the need for a coding system is that products named differently by each country are classified with a single code that will enable the product to be identified in all customs. In this way, obligations such as customs tax rates, additional documents, certificates, tests, controls to be collected from the product are determined.

The control, classification, and taxation of international shipments by the customs authorities are carried out quickly and easily thanks to the HS code. The HS Code list, which includes all products traded worldwide, includes a classification designed according to the products’ main characteristics.

The Harmonized System Nomenclature (AS) constitutes the basis of the tariff schedule of every country worldwide. Nomenclature means the systematic numbering or naming of all products subject to international trade according to international rules and interpretations. Consisting of 6-digit codes, the Harmonized System provides a universal basis for global trade statistics and countries’ tariffs.

In the Harmonized System, all products subject to trade are classified within a certain logic and systematic framework. In customs, products are registered through these codes. While the goods subject to trade are processed at customs, they are processed through these codes. The Harmonized System is a universal trade language for products, product coding, and an indispensable international trade tool. It can also be said that the Harmonized System code is the “identification number” of the products in customs procedures.

How To Read HS Code – How To Find HS Code:

Harmonized System (Tariff Schedule – GTIP) is a classification system consisting of 21 chapters and 96 chapters.

Chapter – Heading – Subheading

  • Chapter is the name given to the 2-digit code in the customs tariff schedule.
  • Heading to 2-digit codes,
  • Each chapter has 4-digit code positions
  • Each position is divided into subheadings with a six-digit code.
  • In other words, two digits were added to each of the chapters expressed with 2-digit codes, and 6-digit sub-positions were created by adding two digits to each of the 4-digit positions.

The first 6-digit codes in each country’s tariff schedule using the Harmonized System are the same all over the world. In other words, these codes refer to the same product/product group across the globe. For example, in all countries’ customs, when Code 640411 is mentioned, “sports shoes” are understood. Harmonized System Structure for sports shoes.

640411 : Sports shoes.

64: chapter: 2 digits define which chapter the product is in (HS-2).

04: heading: 2 digits define the product category (HS-4).

11: subheading: 2 digits describe the product specifically (HS-6)

Let’s go step by step according to this definition.

Find the 6-digit HS Code of the Sneakers / Sport Shoes

64 : Footwear, Gaiters And The Like; Parts Of Such Articles

6404 : Footwear, With Outer Soles Of Rubber, Plastics, Leather Or Composition Leather And Uppers Of Textile Materials

640411 : Sports Footwear, Including Tennis Shoes, Basketball Shoes, And Gym Shoes, With Outer Soles Of Rubber Or Plastics And Uppers Of Textile Materials.

6404110000 : Footwear With Uppers Of Textile Materials And Outer Soles Of Rubber Or Plastics, Sports Footwear, Including Tennis, Basketball, And Gym Shoes Etc

The numbers after the 6-digit code are used for the detailed classification of the products but in the countries’ customs tariff schedules.

The 7th, 8th, 9th and 10th digits can be different in different countries.

  • EU countries and India have fixed their 8-digit HS codes
  • The USA, South Korea, Canada, and China using 10 digits HS Code
  • Japan and Moldova using nine-digit HS code
  • Turkey using 12-digit product code as the most detailed basis

The European Union uses an 8-digit common code called “Combined Nomenclature -CN” to monitor B members’ trade statistics in more detail.

The European Union “Combined Nomenclature -CN” was created by adding two digits to the 6-digit Harmonized System to monitor the Union member countries’ trade in more detail. In other words, CN = HS Code+2

In the harmonized system, products are classified horizontally and vertically according to 5 main classes: raw materials, natural products, unprocessed products, semi-processed products, and processed products. The entire tariff schedule has been created according to this systematic.

Another feature regarding the classification of the tariff schedule is as follows:

  • 01-83. by material in chapters
  • 84-97. In chapters, it is classified according to function. For example, “Rubber and articles made of rubber.”
  • In Chapter 40, “Wood and Wooden Goods”
  • In Chapter 44, “Glass and Glassware”
  • While the products in Chapter 70 are classified according to the material;
  • In the 80th chapter, “Machines,”
  • “Musical Instruments” in Chapter 93,
  • In Chapter 94, “Furniture” is classified according to the function.

Updating HS Codes

The “Harmonized System Committee” affiliated with WCO is responsible for identifying the goods subject to customs procedures, making the stipulated regulations in the system, and reviewing the changes. Technological developments and the increase in niche usage areas caused the emergence of new products and new sub-categories of existing products.

Every change that occurs in every new product and product group causes the HS codes to change, and the addition of new ones to the system causes updates. For this reason, exporting and importing companies, shipping companies, and customs brokers need to follow up-to-date HS Code versions.

The Harmonized System Committee meets twice a year. Representatives of WCO member countries can accompany these meetings. HS codes are reviewed and updated every five years. The latest updates happened in 2017. Therefore, a recent review and update will take place in 2022.

HS Code System and Harmonized Tariff Schedule

Harmonized Tariff Schedule; It defines all goods traded in a country with a hierarchical structure for duty, quota, and statistical purposes. Exporters should determine the HS code of the product to be exported according to the Harmonized Tariff Schedule (HTS) used by the country’s customs to be exported. It is recommended that exporter companies do research together with the importer company to determine the HS Code in practice.

Depending on the HS code you set before exporting, you will have to pay import taxes. If you do not set and implement the HS code correctly, your goods may be seized during the import process or may encounter some penalties. If two or more HS codes are particularly applicable for your product, you may need to check first by contacting the destination country’s customs.

Brief History Of HS Codes

The Harmonized System Nomenclature was prepared by the Harmonized System Committee of the World Customs Organization in 1988 and was implemented in the same year. Today, it is used by 180 countries that are members of the World Customs Organization. This corresponds to 98 percent of world trade.

Although it is used exactly by all countries that are members of the six codes, countries can add sub-expansions to these six codes according to their own needs. However, they cannot make changes in this 6-code code. They can also not make any changes in the chapter tariff position and sub-tariff position definitions in these six codes. Consequently, it is valid in all countries that are members of the World Customs Organization.

2017 edition of the Harmonized System is the valid version applied in global trade activities, which came into force from 1st Jan 2017. It includes 233 sets of amendments.

Since its inception, the Harmonized System codes have been revised five times. All of them are called revisions and were implemented in 1996, 2002, 2007, 2012 and 2017

How is the tariff classification done?

While making the tariff classification according to the Harmonized Tariff Schedule, the goods’ commercial name may not be used. Words indicating the structure or function of the product can be used instead of the article’s trade name. For example, the product, whose trade name is “microscope,” is described as “Electron microscopes, proton microscopes and diffraction apparatus” in the tariff classification.

Sometimes the trade subject may be included in the tariff classification as the commodity trade name or the name known and used in our daily life. To have accurate information about the foreign trade rules and tax rates that the products you will export or import are subject to, you need to know which HS Code is classified.

When the hs code of an imported product is entered into the system, the amount of tax paid and other obligations are learned. If you want to find out if the importer’s country is subject to any prohibition, restriction, or authorization on the importation of products; First you need to determine the 6-digit HS Code of the product, and then the importer must learn the 8 or 10 digit code valid in the importer’s country.

By specifying your product’s HS code, it is necessary to know the technical specifications and the trade name. It is important to present the catalog, sample, technical content of the product to the customs and other documents. Because, apart from your declaration on the invoice or bill of lading, customs authorities may request such copies to verify the HS code’s accuracy. Any document that gives detailed information about your product and includes technical data about the product features will help determine and verify the HS Code.

Why do you need to know the tariff classification of imported goods?

Each country determines the tax rates to be applied in import and export transactions, the scope of customs controls, the prohibitions applied in foreign trade, quantity restrictions, and other foreign trade rules according to the products’ HS Code information.

Suppose you declare your product to the customs administration not with its commercial name but with the tariff classification’s HS Code. In that case, you can avoid any confusion about the product. Adding the HS code information to your customs declaration, the commercial documents you submit to the customs, along with the trade name of the goods, will also speed up the customs process.

Control of HS Codes for Export and Import

Determining the HS Code is especially important for importers. The tariffs applied to the product to be imported are determined with the HS Code. Any non-tariff barriers applied to the product, such as quotas, restrictions, should be checked before purchasing the product. The healthiest way to do this is through the control procedures to be done with the HS Code through customs brokers.

Exporters need to provide information about their products to their customers at the price offer stage, but it may differ between countries after the first six digits of HS codes.

In the importer’s country, there may be non-tariff barriers that are not applied in other countries. Therefore, with the exporter’s HS Code information, the importing company should check what will be encountered in the customs processes in its own country.

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