HS codes are a global classification system for importing and exporting goods. Administration of the Harmonize System is via by the World Customs Organization (WCO). It serves as the foundation for the worldwide harmonized system Canada.
HS Codes are key aspect of cross border shipping processes. They are a numerical classification method. Customs authorities rely on this system to identify products cross border transit.
The Harmonized Tariff Schedule (HTS) is not simply a list of different products. It is a sort of encyclopedia with general sections. Each section then breaks down into more specific chapters. Each chapter includes headings and subheadings.
There are general rules (general rules of interpretation/ GRI) to guide users to the correct classification within this vast database of codes. This post includes a video presentation.
See section below about the 2022 harmonize tariff schedule updates.
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The three elements to determining the duty rate:
The International Convention on the Harmonize Commodity Description and Coding System (HS Convention) dates from 1988. Major updates occur around every 5 years.
Read More: Understanding import duty and calculation.
Importing and Exporting from Canada: https://www.tariffinder.ca/en/
Find an HS code for shipping from the USA: https://uscensus.prod.3ceonline.com/
Finding the correct HS code to the UK: https://www.gov.uk/trade-tariff
A code with six digits is the universal standard Harmonize system code, whereas a code with seven to 10 digits is an HTS Code.
You may be thinking, so that’s an HTS code – but then what is an HS code? You can think of HTS codes as a local version of HS codes. “HS” stands for “Harmonize System”, and refers to the single, universal and global classification system for most goods and products.
The terms HS Codes or HTS both refer to global tariff schedules. Each country maintains their own HS code system. In this post, we refer to the general process that are fundamental. There are in a variety of countries to consider. A different HS code may be necessary for export from one country versus import to another.
For example:
The use of tariff codes to identify goods is beyond duty calculation. Excise, VAT or GST laws and regulations rely often on tariff headings. Harmonize system codes can can determine unique treatment of a specific good.
The application of tariff headings are subject to interpretation. Customs officials are familiar with classification, whereas tax officials working in the sales and consumption tax areas may be less so.
Review accompanying International recources for HS code
The HS structure contains thousands of headings in 96 Chapters. Some break down into sub-Chapters. The Chapters arrange in 21 Sections.
Each heading is identifies by a four-digit code:
The Harmonize system is a global method to describe goods for export and import. The system is structure is via the World Customs Organization (WTO).
The WTO serves to translate descriptions of items from language and industry nomenclature, into a universal numerical value.
For example: A toothbrush translates into the numerical code of 9603.20; A DVD equals 8523.40.
The first 6 digits of the Harmonize code is the international standard. The following sequence is for use by a specific country. Raw materials appearing early in the early chapters and goods with higher processes in the later chapters.
Importers and exporters often must declare their products to Customs by means of HS codes. HS classification determines a product's rate of duty. Also its admissibility if a physical examination is necessary. In some countries, report of HS codes is necessary for Customs prior to export. In the United States, this mandatory advance cargo reporting program is the "ISF", or "10+2".
Resources for finding the correct HS Code
Even with the many online resources, finding the correct code can prove frustrating. For example: An electric toothbrush = "Electro-mechanical domestic appliances, with self-containing electric motor, other than vacuum cleaners of heading 85.08. Other."
The last digits after the HS code are different for each country. Be sure to confirm the correct code on you commercial invoice. Otherwise, an incorrect classification of your product can result. If you are exporting the goods, confirm the code with the receiver. For importing goods, make sure the shipper applies the Canadian Harmonize system code.
It is also a good idea to confirm with your international customer which HS Code before shipping. Although the exporter is responsible for declaring the correct HS code, the larger burden is with the importer. The HS code determines critical import elements such as admissibility, restrictions and duty.
The six General Rules for the interpretation (GRI 1 to 6) determine how to find the correct HS code.
In general, if it looks like a duck, and quacks like a duck, then it is duck. Not feathers, wings, web feet or a beak. The defining attributes in determining an HS code is its "essential character of complete article." .
Below if a simpler listing to help with basic understanding. For questions, best to contact an HS code commodity specialist in customs prior to import.
The HS Committee that is under the HS Convention convenes regularly to update the Explanatory Notes to the HS. They issue opinions and rulings on specific goods. Although these notes, opinions and rulings are not legally binding, they provide useful guidance.
The tariff classification has a direct correlation to the import duty rate.
One of the first steps in determining if goods qualify under Canadian Free Trade Agreements is to find the tariff classification. Then check under that FTA's Specific Rules of Origin.
Read more: Understanding duty and calculation.
A description of "shoes" is commonly understood to be footwear. Shoes can also mean parts of machinery, brakes, precision measuring equipment, cameras.
To send an international courier shipment, always include a clear, detail description. Also include the purpose or function of the item . International couriers have the ability to efficiently assign HS Codes. It is best, however, to provide at least the first 6 digits of the HS Code.
The HS code for shoes?
Most important is that the classification captures the essence of the product. Importers should be aware that researching alternative - yet still correct classifications - can save a significant amount of duty.
E-commerce companies who have predetermine HS Code and duty charges, can easily access the various countries and determine the likely rate of duty.
The HS Coding system is an incredible feat of international cooperation to facilitate international trade. Understanding the basic concepts are critical to everyone sending or receiving international shipments - whether via international courier or mail, truck or ocean.
Canada has a tariff classification process for postal and courier imports. The system may be useful in lieu of a more detail classification. This a great benefit for e-commerce imports.
This gives the option to apply one of three generic Most-Favour-Nation (MFN) tariff rates. Assessment on “special classification provisions” found in Chapter 98 of Canada’s Customs Tariff.
Importers to Canada can request an advance ruling to verify the correct tariff classification. Request can be direct to Canadian customs/ CBSA.This option is available to most countries including the USA and to European countries.
A tariff rate quote is the limitation on the quantity of goods. It applies to specific HS codes that may be eligible for a specific tariff treatment. Quotas apply for specific periods of time.
The system a tool for worldwide customs authorities to classify goods, the Harmonize System (HS). The latest update being 2022.
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After establishing the HS Code, value and other information, the next step is to review the international shipping options export and import to Canada. These can include: