What is the Harmonized System (HS) Code and Why Does It Matter?

When shipping products overseas, you will need to provide a harmonized system (HS) code for each item in your shipment. HS codes are used by customs authorities around the world to identify the type of goods being imported or exported and assess the correct tax rate.

In most cases, the HS code will be based on the product’s description, but there are some cases where the classification is more complex. It’s important to get the code right, as incorrect classification can lead to delays at customs and potentially costly fines.

What is an HS Code?

An HS code is a 10-digit code used by customs authorities to identify the type of goods imported or exported. HS codes are based on the Harmonized Commodity Description and Coding System, which is maintained by the World Customs Organization (WCO).

The first six digits of a code corresponding to the product’s classification in the HS nomenclature. This nomenclature is used by customs authorities worldwide and allows for a consistent approach to classifying goods.

The HS nomenclature is updated every five years, with the most recent update taking effect in 2017. The nomenclature is divided into 21 sections, which are further divided into 96 chapters. Each chapter contains a list of goods, with a description and a code for each good.

The first two digits of a code are known as the chapter number and identify the broad category of goods. For example, Chapter 84 covers nuclear reactors, boilers, and machinery, while Chapter 85 covers electrical machinery and equipment.

The next two digits are the heading number and provide a more specific classification for the goods. For example, HS code 8419 covers machinery and equipment for the treatment of materials by heat, while code 8517 covers telephone sets, including telephones for cellular networks or other wireless networks.

The final six digits of a code are known as the commodity code and provide the most specific classification for the goods. These digits are used to identify the exact product and can be used to assess the correct customs duty and tax rates.

Why is it important to get the HS code right?

It’s important to correctly identify the code for each product in your shipment, as this will determine the customs duty and tax rates that apply. Inaccurate codes can lead to delays at customs and potentially costly fines.

Sometimes, the code will be based on the product’s description. For example, the HS code for a ‘television set’ would be based on the product’s description rather than its function.

The classification is more complex in other cases, as explained at https://www.dhl.com/discover/en-my/faq/shipping-regulations/hs-code. For example, the HS code for a ‘computer’ would be based on the product’s function rather than its description. This is because there are many different types of computers, each with a different code.

You will need to consult the HS nomenclature to identify the code for your product correctly. This can be a complex process, and you may need assistance from a professional classification service.

Once you have identified the code for your product, you will need to provide this information to your customs broker or freight forwarder. They will use this information to prepare the necessary customs documentation.

Conclusion

It’s important to correctly identify the HS code for each product in your shipment. Inaccurate codes can lead to delays at customs and potentially costly fines. You will need to consult the HS nomenclature to identify the code for your product correctly. This can be a complex process, and you may need assistance from a professional classification service. Once you have identified the code for your product, you will need to provide this information to your customs broker or freight forwarder. They will use this information to prepare the necessary customs documentation.