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Trying to classify goods with HS codes code can be extremely frustrating. Chapters seem a little obscure and it is almost impossible to find the exact item you wish to import – but it becomes a lot easier once you understand how the system works and have a few handy tools at your disposal.
The following is a primer for tariff classification numbers (HS codes); how they work and how you can easily classify goods yourself.
The harmonized Commodity Description and Coding System, a.k.a. HS system, is a system for classifying goods for international trade. Over 200 countries representing approximately 98% of world trade use the HS as a basis for customs tariffs, although they do differ slightly by country.
First things first, learn how to read HS codes.
Lets take for example: a leather sofa
HS code: 9401.61.10.90
How to read a tariff code
- The first 2 numbers (94) represents the chapter. In this case, chapter 94 represents:
Furniture, bedding, mattresses, mattress supports, cushions and similar stuffed furnishings, lamps and lighting fittings, illuminated signs/name plates, prefabricated buildings.
There are 99 chapters covering specific types of items OR specific material of which it is made
- The third and fourth digits (01) represent the header – this would be where we are specifying this is a type of seat
- The fifth and sixth numbers (61) represent the subheader – this bring the header into greater details, letting us know that this is an upholstered seat
- The seventh and eighth number (10) represents its intended use, in this case for domestic purposes
- The last two digits of the HS code will give you the broad description (90) in this case “other”. You will notice “other” is a term repeated frequently in the customs tariff schedule and is used when the specific item is not mentioned. In the case of this leather sofa, there are only two options for the last 2 digits: 10 (chairs) and 90 (other) in this case as it is not a stand-alone chair, it will fall into the “other” category.
In Canada, there are about 18 different tariff treatments, 16 of which when applied, will lower the duty rate given as a result of a trade agreement or other preferential treatment Canada affords to beneficiary countries.
When looking up HS codes, you will notice on the right hand side of the page a series of letters, this is the tariff treatment. It will list a tariff treatment and give a duty rate. If the country of origin of the goods happens to be a beneficiary of the tariff treatment, a certificate of origin would be required (or Form-A) and that duty rate would apply.
A list of tariff treatments as well as their beneficiary countries can be found on the CBSA website.
Classifying your goods
Hopefully by now, HS codes will make a little bit more sense and not seem like a random string of numbers. Now that you understand how the HS system works, you can start to classify your own goods.
Clearit.ca now offer an automated HS code Quick search, available here
Hope that helps!