Harmonized System of Tariff Classification

The Importance of Tariff Classification

All goods imported must be classified in order to have duties and taxes assessed. Tariff classification enables governments to identify goods imported into the country for purposes of duty and tax collection, as well as gathering statistical information for economic planning, trade negotiation, and the enforcement of national and international laws.

A global "Harmonized System" for the description and classification of goods was created in 1988, and soon after adopted by nations around the world. The broad, core specifics and structure of Harmonized System classifications is universal, with each participating country elegible to add and define specific detail items, and to create and assign rates of duty in any required categories for all classifications.

For an importer, correct classification of goods is a legal responsibility, and also often saves money on both duties and taxes. In some countries, it also speeds customs release. When examining a company's past imports, customs consultants nearly always find that overall, too much duty has been paid, indicating that the importer (or their broker) did not take full advantage of provisions in the Tariff. Making use of these provisions requires a precise and thorough knowledge of the product to be classified, as well as knowledge of the Tariff and the principles of classification.

How goods should be classified can depend on minute technical details of their composition and manufacture. Whether they are eligible for any of the special provisions of the Tariff that allow for lower duty rates usually depends on the use or purpose for which they are being imported, or on the availability of certificates of origin. The importer is in the best position to know these facts, and increasingly importers are becoming aware of this and choosing to classify their own goods, or verify the work of third parties (in particular, their customs broker).

Importers who use custom brokers should not leave classification of their goods entirely up to the broker. By understanding how the tariff classification process works, they will be able to work together with their broker to ensure that their goods are classified correctly. Brokers, on the other hand, should insist on getting complete, accurate product descriptions, including intended use, from the importer.

The Harmonized System of Tariff Classification

All imported goods must be properly classified using the Harmonized System of Tariff Classification. Tariff classification enables governments to identify goods imported into the country for purposes of duty and tax collection, as well as gathering statistical information for economic planning, trade negotiation, and the enforcement of national and international laws.

The Harmonized System of Tariff Classification is used worldwide. The core specifics and structure of tariff classifications are universal, with each participating country eligible to define specific detail items and assign applicable rates of duty to any required category.

The Harmonized Commodity Description and Coding System was designed to meet the following goals:

The systematic classification of all goods found in international trade.
Classification of all goods on a uniform basis in the tariffs of all countries adopting this Nomenclature.
The adoption of a common internationally accepted Customs language.
Simplicity and certainty of meaning in the negotiation, application and interpretation of trade agreements.
An internationally uniform basis for the collection of trade statistics.