Harmonized System (HS) Codes

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Harmonized System (HS) codes

HS codes, accepted by the majority of nations around the world, are identification codes given to goods for use in international trade. The HS codes are administered by the World Customs Organization (WCO) and are internationally accepted for use by customs authorities and companies to identify goods.

Key features of HS codes:
  • Six digit code to classify the goods
  • Defined rules that classify the goods
  • Act as a uniform standard for classification of goods worldwide
  • Covers 98% of goods in international trade and over 5000 commodities
Why you need your HS codes

The correct HS code for your goods will be required for use in legal and commercial documents when undertaking trade.

Some examples of use are in sales contracts, bills of lading, letters of credit, and certificates of origin.

Some of these legal and commercial documents are needed when applying for trade finance.

HS codes are also used by customs authorities to apply tariffs and taxes to goods and keep track of imports and exports.

HS general rules

The WCO has a comprehensive classification system for HS codes. The goods will fall under a section and follow onto chapters, headings, and sub-headings, each step increasing in specificity.

There are 21 sections, 99 chapters, 1,244 headings, and 5,224 sub-headings.

The anatomy of an HS Code:

  1. First two digits: Chapter
  2. Second two digits: Heading
  3. Final two digits: Sub-heading
Classifying your goods
Using the WCO Harmonized System webpage you can identify the HS code for your goods with their classification key.
Example: HS code for roasted caffeinated coffee

The HS code for ‘roasted caffeinated coffee’ would be (0901.21).

The importance of HS codes in international trade

The acceptance and versatility of the HS code as a universal economic language and code for goods has made it an indispensable tool for international trade, incorporated into many customs clearance systems around the world.

Customs procedures
Using the correct HS code and the right interpretation is of utmost importance, as usage of incorrect code may be considered by customs as non-compliance, misleading or misdeclaration – each of which comes with its associated penalties.
Using the correct HS code can be quite tricky in specific instances, as an interpretation of the codes may vary between countries and customs authorities.
Improper usage of the HS code could result in an improper tariff being applied by customs, which can increase the cost of imports to the customer exponentially.
Trade statistics
The uniform codes also allow for use in tracking trade statistics. In addition to governments, the code is also used by private-sector firms and international organizations.
It is utilized to monitor, update, and optimize controlled goods, internal taxes, rules of origin, trade policies, transport statistics, freight tariffs, a compilation of national accounts, quota controls, price monitoring, traffic statistics, and economic research and analysis.
Transferring trade information
HS codes are used extensively in electronic messages like the United Nations rules for Electronic Data Interchange for Administration Commerce and Transport (UN/EDIFACT).
This has made it easier for the system to become a worldwide standard for describing a good across various platforms. Its nearly universal usage allows authorities such as port and customs departments to identify the products.
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