The "Harmonized System" (HS) codes are 6-digit codes used by customs authorities worldwide to identify products to apply legal requirements, customs duties and taxes. Over 98 % of world trade is classified using HS numbers. It is the universal trading language for products.
It is developed by the World Customs Organization (WCO) and revised every 5 years. It comprises about 5,000 commodity groups; each identified by a code, arranged in a legal and logical structure and is supported by well-defined rules to achieve uniform classification. Besides, some governments add further digits to the HS number to further distinguish products in certain categories.
As universal language for trade, it is extensively used by governments, international organizations and the private sector for many other purposes such as internal taxes, trade policies, monitoring of controlled goods, rules of origin, freight tariffs, transport statistics, price monitoring, quota controls, compilation of national accounts, and economic research and analysis.
How Does It Work?
The products are classified at 2, 4, and 6 digit level.
At 2-digit level are the chapters. Each chapter is further divided into several 4-digit codes, which are called headings. These headings are subdivided into 6-digit codes, which is called sub-headings.
Example of chapter:
LIVE ANIMALS; ANIMAL PRODUCTS
|CHAPTER 1||LIVE ANIMALS|
|CHAPTER 2||MEAT AND EDIBLE MEAT OFFAL|
|CHAPTER 3||FISH AND CRUSTACEANS, MOLLUSCS AND OTHER AQUATIC INVERTEBRATES|
|CHAPTER 4||DAIRY PRODUCE; BIRDS' EGGS; NATURAL HONEY; EDIBLE PRODUCTS OF ANIMAL ORIGIN, NOT ELSEWHERE SPECIFIED OR INCLUDED|
|CHAPTER 5||PRODUCTS OF ANIMAL ORIGIN, NOT ELSEWHERE SPECIFIED OR INCLUDED|
See all chapters here
Example of subheading:
|0101||Live horses, asses, mules and hinnies|
|0101 21||Pure-bred breeding animals|
|0101 29 10||For slaughter|
|0101 29 90||Other|
See all subheadings here (click on the blue links for further details)
Differences Among Countries
HS Codes up to 6 digit level are used internationally and common to most countries in the world. In other words, these codes represent the same product anywhere. For instance, HS Code ‘071120’ is “olive” in all countries’ customs.
Besides, countries can decide to extend the numbers (8-digit, 10-digit, 12-digit level) according to their needs for detail depending of a variety of reasons (e.g. to obtain more detailed statistics, to apply customs duties on the basis of more detailed product codes). This means that, the HS code for lentil is 071340 in all countries. However, every country can use different codes to differentiate the types of lentils after the 6-digit code HS Code. To visualize it, check the table below with the classification of lentils in Turkey, USA and Canada
|Seeds for sowing||0713.40.00.00.11||0713.40.10.00||0713.40.00.10|
As can see, lentil is coded as 071340 (HS code) in all three countries. However, species of lentils can differ after 6-digit code. Each country is allowed to add additional digits in these international HS codes to suit their national statistical or trading needs.
- The first thing to do BEFORE exporting is to check the code your product is classified in your EXPORTING destination. Note that this may differ from the code you use at your own country. But, the legal requirements, customs tariffs and taxes you will need to fulfil are the ones in force in your EXPORTING destination, therefore you need to know the code they give to your product. For instance, a business from Botswana exporting beef to Germany needs to know the German code for beef and fulfil the German legal requirement, tariffs and duties to access the German market. On the other hand, if a German business wants to export cars to Botswana, it will need to know the Botswana code for cars and fulfil the Botswana legal requirements, tariffs and taxes.