HS Code Import Duty

HS Code Import Duty

How to Find HS Codes and Calculate Import Duties for Your Products

If you are involved in international trade, you may have heard of HS codes and import duties. But what are they and how do they affect your business? In this article, we will explain what HS codes are, how to find them, and how to calculate the import duties for your products.

What are HS codes?

HS codes are an international standard for identifying different types of products. They are also known as tariff codes or harmonized system codes. The HS code system was created by the World Customs Organization (WCO) in 1988 and is used by more than 200 countries and territories to classify and tax imported goods.

HS codes are composed of six digits that are divided into 21 sections and 96 chapters. The first two digits indicate the section and the chapter, the next two digits indicate the heading, and the last two digits indicate the subheading. For example, the HS code for coffee is 0901.11.00, which means:

  • Section 09: Coffee, tea, maté and spices
  • Chapter 01: Coffee
  • Heading 11: Coffee, not roasted
  • Subheading 00: Not decaffeinated

Some countries may add additional digits to the HS code to further specify the product. For example, the United States uses a 10-digit code called the Schedule B number, which is based on the HS code but adds four more digits to indicate the statistical reporting number. The Schedule B number for coffee is 0901.11.0010, which means:

  • Section 09: Coffee, tea, maté and spices
  • Chapter 01: Coffee
  • Heading 11: Coffee, not roasted
  • Subheading 00: Not decaffeinated
  • Statistical reporting number: 10

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Why are HS codes important?

HS codes are important for several reasons:

  • They help customs authorities to identify and tax imported goods correctly.
  • They help exporters and importers to declare their products accurately and avoid penalties or delays.
  • They help traders to find out the import duties and other taxes that apply to their products in different countries.
  • They help governments to collect trade statistics and monitor trade flows.
  • They help businesses to conduct market research and find new opportunities.

How to find HS codes for your products?

There are different ways to find HS codes for your products:

  • You can use online tools such as the WCO’s Harmonized System Database , the U.S. Census Bureau’s Schedule B Search Engine , or Wise’s Import Duty Calculator . These tools allow you to search by product name or description and provide you with the corresponding HS code and import duty rate for various countries.
  • You can consult official publications such as the Harmonized Tariff Schedule of the United States (HTSUS) , which lists all the U.S. import duty rates and product classifications based on the HS code system. You can also find similar publications for other countries on the WCO’s website .
  • You can ask your supplier or manufacturer for the HS code of your product. They should be able to provide you with this information as they are responsible for producing or exporting the product.
  • You can request a binding ruling from your local customs authority if you are unsure about the correct HS code for your product. A binding ruling is a written decision that confirms the product classification and duty rate for a specific product. You can find out how to apply for a binding ruling on the U.S. Customs and Border Protection’s website or on the websites of other customs authorities.

How to calculate import duties for your products?

Once you have found the HS code for your product, you can calculate the import duty rate that applies to it in your destination country. Import duty rates vary depending on the product type, origin, value, and other factors. Here are some steps to follow:

Find out the tariff schedule of your destination country

A tariff schedule is a list of all the import duty rates and product classifications for a specific country. You can find tariff schedules on official websites such as export.gov , trade.gov , or on online tools such as Wise’s Import Duty Calculator .

Find out if your product qualifies for any preferential tariff under a free trade agreement (FTA) or other trade arrangement

An FTA is an agreement between two or more countries that reduces or eliminates tariffs on certain products. For example, if you are exporting coffee from Colombia to the United States, you may benefit from a zero duty rate under the U.S.-Colombia Trade Promotion Agreement . You can find out if your product qualifies for an FTA on official websites such as export.gov , trade.gov , or on online tools such as Wise’s Import Duty Calculator .

Find out if your product is subject to any additional taxes or fees

Some products may be subject to additional taxes or fees such as value-added tax (VAT), goods and services tax (GST), excise tax, anti-dumping duty, countervailing duty, or other charges. These taxes or fees are usually calculated as a percentage of the product value or a fixed amount per unit. You can find out if your product is subject to any additional taxes or fees on official websites such as export.gov , trade.gov , or on online tools such as Wise’s Import Duty Calculator .


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Calculate the total import duty amount

To calculate the total import duty amount, you need to multiply the product value by the import duty rate and add any additional taxes or fees. For example, if you are importing coffee from Colombia to the United States, and the product value is $10,000, the import duty rate is zero (under the FTA), and the VAT rate is 10%, the total import duty amount is:

$10,000 x 0% + $10,000 x 10% = $0 + $1,000 = $1,000

Therefore, you will have to pay $1,000 in import duties for your coffee shipment.

HS codes and import duties are essential aspects of international trade that you need to understand and comply with. By finding the correct HS code and calculating the import duty rate for your product, you can avoid delays, penalties, and extra costs at customs. You can also use HS codes and import duties to conduct market research and find new opportunities for your business.

HS Code Import Duty: Trends and Implications for Global Trade

The Harmonized System (HS) is a global product classification system that assigns specific six-digit codes to different types of goods. The HS codes are used by customs authorities around the world to identify products when assessing duties and taxes and for gathering statistics. The HS codes are also the basis for the U.S. Schedule B numbers, which are used to classify products for export .

The HS codes are updated every five years by the World Customs Organization (WCO) to reflect changes in trade patterns and product innovations. The latest revision, HS 2022, will enter into force on January 1, 2022, and will introduce 351 new subheadings, 53 amendments to existing subheadings, and 19 deletions of subheadings . Some of the main changes include new subheadings for electronic waste, novel tobacco products, drones, smart fabrics, and 3D printers.

The HS codes are not only important for determining the tariff rates that apply to imported goods, but also for measuring the global demand and supply of different products and industries. By analyzing the trade data based on HS codes, we can identify the trends and implications of HS code import duty for global trade.

Electronic Waste: A Growing Challenge for Environmental Protection

One of the new subheadings introduced in HS 2022 is 8548.10, which covers “waste and scrap of primary cells, primary batteries and electric accumulators; spent primary cells, spent primary batteries and spent electric accumulators”. This subheading aims to facilitate the collection and recycling of electronic waste (e-waste), which is one of the fastest growing waste streams in the world.

According to the Global E-waste Monitor 2020, a report by the United Nations University, the International Telecommunication Union, and the International Solid Waste Association, the world generated 53.6 million metric tons (Mt) of e-waste in 2019, an increase of 9.2 Mt since 2014. The report also estimates that only 17.4% of the e-waste generated in 2019 was collected and recycled .

E-waste contains valuable materials such as metals, plastics, and rare earth elements, but also hazardous substances such as mercury, lead, and cadmium. If not properly managed, e-waste can pose serious risks to human health and the environment. The new HS subheading for e-waste will help track the trade flows of e-waste and improve its management at the national and international levels.

Novel Tobacco Products: A Controversial Alternative to Conventional Cigarettes

Another new subheading introduced in HS 2022 is 2403.99.10, which covers “heated tobacco products”. These are products that contain tobacco that is heated rather than burned, such as electronic cigarettes or heat-not-burn devices. These products are marketed as a less harmful alternative to conventional cigarettes, as they produce fewer toxicants and carcinogens.

However, heated tobacco products are not risk-free and their long-term health effects are still uncertain. Moreover, they may attract new users, especially young people, who would otherwise not smoke. The World Health Organization (WHO) has warned that heated tobacco products are addictive and harmful to health, and has urged countries to regulate them in accordance with the WHO Framework Convention on Tobacco Control .

The new HS subheading for heated tobacco products will enable countries to monitor their trade more effectively and to apply appropriate tariff measures to discourage their consumption. According to the World Tariff Profiles 2020, a publication by the WCO, the WTO, and the United Nations Conference on Trade and Development (UNCTAD), the average applied tariff rate for tobacco products in 2019 was 31%, ranging from zero to 350% .

Drones: A Promising Technology for Various Applications

A third new subheading introduced in HS 2022 is 8802.60.10, which covers “unmanned aerial vehicles (UAVs)”. These are aircraft that can fly without a human pilot on board, commonly known as drones. Drones have various applications in fields such as agriculture, photography, delivery, surveillance, disaster relief, and entertainment.

According to a report by ResearchAndMarkets.com , a market research firm , the global drone market size was valued at $22.5 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 13.8% from 2021 to 2028 . The report attributes this growth to factors such as technological advancements , increased demand from commercial and military sectors , favorable government policies , and reduced costs.

The new HS subheading for drones will help capture the trade data of this emerging and dynamic sector and facilitate its regulation and standardization. The trade of drones is subject to various rules and restrictions depending on the country of origin, destination, and use. For example, some countries require licenses, permits, or certificates for importing or exporting drones, while others impose bans or quotas on certain types of drones .

References:

http://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx

http://www.wcoomd.org/en/about-us/wco-members/membership.aspx

https://www.trade.gov/harmonized-system-hs-codes
https://www.wcoomd.org/en/media/newsroom/2020/june/wco-publishes-the-2022-edition-of-the-harmonized-system-nomenclature.aspx
https://www.itu.int/en/ITU-D/Environment/Documents/Global-E-waste%20Monitor%202020%20(E).pdf
https://www.who.int/news-room/q-a-detail/tobacco-heated-tobacco-products
https://www.wto.org/english/res_e/booksp_e/tariff_profiles20_e.pdf
https://www.researchandmarkets.com/reports/5312399/drone-market-growth-trends-covid-19-impact-and
https://www.dlapiper.com/en/us/insights/publications/2019/12/drones-series-part-1/

https://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx



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