Understanding the importation and exportation of products using tariff codes is essential. Tariff codes are harmonized systems or custom codes used by authorities worldwide to track, identify, and classify goods for taxation and regulation. You must know how tariff codes work, their structures, importance, and identification.
Understanding Tariff Codes and their Structures
Regarding international shipping, tariff codes play a very important role for exporters, importers, and authorities. For you as an importer or exporter, it helps to easily identify your goods and comply with the law of shipping goods. For the authorities, it helps them to know the type of products you’re bringing in and your tax fee.
Most exporters and importers face different issues because of the wrong use of tariff codes. Classifying your products using the correct China HS Code should be your priority. It will help the customs authorities know the regulations and certifications for your goods. Otherwise, you may stress them out, lose your goods to be seized, get your shipping license revoked, or get penalized.
HS codes can be affected regularly by new government reforms to optimize imports. Also, countries preferential treaties with other countries and the professionalism of your local agents.
The Harmonized System (HS), which is the tariff nomenclature, is a standardized system that is internationally accepted. Nomenclature simply means naming, so, it’s is the names and numbers used to classify traded products. It all started in 1988 and since then, it has been developed and maintained by the World Customs Organization (WCO).
A full HS code consists of 8 to approximately 12 digits. To ensure harmonization, the international rule is that contracting parties must employ at least 4-digit and 6-digit provisions. For China, her Customs Commodity HS Code has been changed from the original 10-digit HS code to the new 13-digit HS code.
The first 8-digit is the commodity HS code of “Import and Export Tariff of the People’s Republic of China.” 9 and 10 digits are customs supervisory additional numbers, and 11-13 are additional numbers for inspection and quarantine. HS tariff has 21 sections and 99 chapters.
The section 1 is the section for live animals and animal products with five chapters to different between the type of animal products. For example; diary products that birds produce–like egg-can be found in chapter four. Vegetable products can be found in section two with different chapters to also differentiate the type of vegetables.
For instance, section 8 of the Harmonized system is for raw hides and skins, leather, furskins, saddlery and harness, travel goods, handbags, and similar containers. The chapters help to break down the products into simplified categories.
This means any product you are selling or planning to sell has its section and chapters in the Harmonized system. It’s now your work to find them or use the recommendations prescribed in this article–to find your tariff code. Check how tariff codes are Structured for more explanation on it.
How Tariff Codes are Structured
HS codes are usually the first six digits of the Tariff code, which is the same worldwide. They are divided into sections, headings, and subheadings. The other digits can vary based on the country’s nationality and tax rate.
First Two Digits: This means the session the product belongs to. For example, HS Code 620520 would, therefore, comprise the following:
- 62 (Chapter) – Articles of apparel and clothing accessories, not knitted or crocheted
- 05 (Heading) – Men’s or Boy’s Shirts
- 20 (Subheading) – Of Cotton
Next Two Digits: These narrow down the classification further by identifying the subcategory. This could mean the apparel and clothing not knitted or crocheted is for men or boys.
Last Two Digits: Individual countries use the last two digits to further break down the categories. From the example, subheading 20 means it is a cotton material. This is where countries like China and the U.S. might classify products differently, depending on their trade rules.
By using these codes, countries create a global system where everyone knows exactly what type of product is being traded, ensuring consistent taxes, duties, and regulations. This does not mean a tariff code is majorly made of six digits. Other digits (7&8) will be CN–derived from the EU’s product nomenclature, called the CN (Combined Nomenclature). You will need these eight digits when exporting goods.
If you are importing goods, you need to know the last two digits of your commodity code. These two digits come from TARIC. It is the EU’s integrated customs tariff, and they determine, among other things, whether there are tariff suspensions, possibilities of tariff reductions, or anti-dumping duties when importing from third countries.
Step-by-step Guide to Finding Your Tariff Code
Finding your tariff code is not hard if you’ve followed this guide from the beginning. Now, let’s check the step-by-step guide to find your tariff codes:
1. Identify Your Product
Finding a tariff code without knowing the product you are sending or receiving will not yield a nice result. You have to identify your product specifically by knowing the type. For example, the previously used men’s T-shirt or wristwatch. That’s specific enough, but you must also understand the features that make it different.
2. Use the Harmonized System (HS)
After identifying your product, head over to the Harmonized System, which is explained in detail in this article. To ease your stress, you can search for online HS code tools on government websites, trade portals, and customs agencies. Websites like the World Customs Organization (WCO) or your country’s customs page. When you already know the HS code for the product, you can break it down by following the next step.
3. Check the Sections and Chapters
The HS code system is divided into sections and chapters. Kindly cross-check to find the section that matches your product. For example, chemical products fall under Section 6.
This means every chemical product will be under Section 6, but the chapter may differ. Fertilizers fall under Chapter 31, while organic soaps fall under Chapter 34. You wouldn’t tag your product as organic soap when it is a fertilizer.
4. Know Your Product’s subcategory
Look through the subcategories once you’ve found the right section and chapter. Here’s where things get more specific. Let’s use an electronics product for more specificity here. Phones might be subcategorized into mobile phones, landlines, and smartphones.
5. Check the National Tariff Schedules
As explained earlier, every country can modify the last few digits of the HS code, so check the tariff schedule for both the country you’re exporting from and the one you’re importing to. This will help you find the exact code. For example, check China’s customs tariff schedules when trading with China. If you’re trading with European Union countries or Nigeria, check their tariffs, too.
6. Confirm with Experts
Sometimes, finding the exact tariff code can still be difficult. If you’re unsure of the code, it is better to confirm with a customs broker or an expert in international trade. They can provide guidance and ensure you have the correct code for your product. Breaking the tariff code law comes with penalties you won’t want to experience. Don’t do it alone.
Helpful Tips on How to Find Your Tariff Code
Finding your tariff code does not have to stress you out. Read through the following tips to have more clarity:
Use Online Databases
Don’t do it alone when there are platforms that can do the job for you. Some countries offer free databases where you can search for tariff codes. All you need to do is enter your product description, which will display your product’s tariff code. For example, the U.S. has the Schedule B Search Engine system, while China’s customs site offers a similar tool in Chinese.
Consult Industry Associations
If you’re importing or exporting something specific, such as medical devices, furniture, chemicals, or clothing, industry associations often provide resources to help find the correct tariff codes.
Use a Customs Broker
If you’re new to international trade or probably dealing with a complex product, hiring a customs broker is best. This will save you time. Their work is to help you navigate the HS system and find the right tariff code.
Double-Check with Both Countries
Remember that while the HS code system is standardized, the last few digits may differ depending on the country. Be sure to check the codes for both China and the country you’re trading with to avoid any issues.
Be Updated
Tariff codes are changed regularly to align with the changes in global trade. Ensure you’re using the most up-to-date codes by checking the latest 2024 tariff schedules for China and other countries involved.
Conclusion
International trade without an understanding of tariff codes may be an unproductive journey. Tariff codes are very important in classifying products and knowing their duties. Knowing your product’s tariff code allows you to narrow down your import and export processes, eradicate delays, and save more money.
