5 Basic Things You Need to Know About Harmonised System (HS) Code

The Harmonised System (HS) Code is one of the three standard classification systems for merchandise trade that uses standardised numerical methods of classifying traded products. Through the HS Code on import and export goods, customs authorities around the world can easily assess the duties and taxes that should be levied on them. Do note that the meaning of the HS Code is equivalent to that of the Harmonised Tariff Code, and both terms can be used interchangeably.

1. What is the Harmonised System? When was it enforced?

The Harmonised System (HS) came into effect in 1988 when the World Customs Organisation (WCO) implemented a standardised numerical system to help its over 200 member countries and territories classify traded products for assessing harmonised tariff. The HS Code definition simply outlines a specific set of six-digit numbers for each product group. Countries can also choose to add extended codes to the first six digits for further classification. For example, a general code for electronic products could be 8542 but an HS Code for shipping electronic components further defines them with codes like 854231 or 854232 to differentiate between similar products.

2. How many countries are adopting the Harmonised System? 

The HS Code is used by over 200 countries and economies around the world, including Malaysia, Singapore, China and the United States. With over 98% of countries involved in international trade, it is safe to say that the Harmonised System is used worldwide. The acceptance of the HS Code classification as a universal economic language has made it indispensable for international trade because it efficiently filters out non-compliant practices and facilitates seamless shipment handling based on legalised terms across different territories. 

3. Why is the Harmonised System important?

Careful classification of goods according to the Harmonised System Code list is of utmost importance for importers and exporters alike. The HS code classification is not only a legal responsibility but also critical for preventing shipment delays and ensuring the accurate calculation of export and import taxes. Any wrongful classification can result in overpaid or underpaid duties for the overall shipment. In the same breath, any goods that are classified inaccurately to escape hefty taxes may be liable for incurring penalties from authorities.

Refer below for a summary of how the HS code is applied in certain countries. 

Harmonised System Code

Commonly known as: HS

No. of Digits: 6 Digits

India HS Code

Commonly Known as: HSN

No. of Digits: 3 types of uniform code are used to classify goods: 4 digits, 6 digits and 8 digits, depending on what it is used for

ASEAN HS Code (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam)

Commonly Known as: AHTN

No. of Digits: 8 Digits

China HS Code

Commonly Known as: Custom Tariff Code

No. of Digits: 13 Digits

European Union HS Code

Commonly Known as: TARIC Code

No. of Digits: 10 Digits

Australia HS Code

Commonly Known as: Customs Tariff or Working Tariff

No. of Digits: 8 Digits

Hong Kong HS Code

Commonly Known as: HKHS Code

No. of Digits: 8 Digits

Japan HS Code

Commonly Known as: Tariff Schedule

No. of Digits: 9 Digits

Singapore HS Code

Commonly Known as: HS Code

No. of Digits: 8 Digits

Taiwan HS Code

Commonly Known as: Customs Tariff, Import Tariff, Custom Import Tariff

No. of Digits: 10 Digits

UAE HS Code

Commonly Known as: HS Code

No. of Digits: 8 Digits

United Kingdom HS Code

Commonly Known as: UKGT

No. of Digits: 10 Digits

4. How is the Harmonised System used?

The Harmonised System comprises 21 chapters, and each chapter provides chapter notes, codes and descriptions of commodities. Each HS Code comprises six digits, with the first two digits indicating the chapter that the HS code is classified under. The next four digits indicate the heading and sub-heading within the chapter. 

ASEAN member countries use the 8-digit ASEAN Harmonised Tariff Nomenclature (AHTN), which is based on the 6-digit HS system developed by the WCO. Commodities shipped within ASEAN typically follow the 8-digit AHTN classification, but 6-digit HS codes are also accepted.

5. Who is responsible for classifying goods?

Importers and exporters are solely responsible for accurately classifying their goods to avoid wrongful coding that can lead to a string of consequences ranging from penalties, delayed shipment and reduced revenue. In the worst-case scenario, authorities may even cancel the company’s Accredited Client Programme and Importer Exporter Code. Since the parties importing and exporting the products are the ones who know the details of the goods, they are in the best position and most responsible for selecting the most accurate HS Code classification. 

For more information about the HS Code and how you can obtain a code for a product in Malaysia, please refer to this FAQ section.