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In Singapore, businesses trading across borders are often confronted with a key term: HS Code (Harmonized System Code), an international standard developed by the World Customs Organization (WCO) to classify goods and a coding system for imports and exports recognized by more than 200 countries worldwide. In this article, we’ll take a closer look at the structure of the HS Code, its use in ASEAN, and how to get the right HS Code.
What is HS Code?
The HS Code is known as the Harmonized System Code and usually consists of six digits. It is used to systematically classify imported and exported goods and helps customs and government agencies around the world to identify and regulate products. HS. The HS Code makes the classification of items, application of tariffs and compliance management more standardized.
The Structure of HS Code
Here’s an example of clothing items to illustrate the HS Code structure:
- First Two Digits: Identify the product chapter (e.g., Chapter 61 for “Articles of apparel and clothing accessories, knitted or crocheted”).
- Next Two Digits: Specify the heading within that chapter (e.g., heading 10 for sweaters, pullovers, sweatshirts, and similar items).
- Last Two Digits: Further refine the product’s subcategory (e.g., subheading 20 for cotton-made sweaters).
For example, a cotton sweater might have an HS Code starting with 6110.20.
Different countries and regions add additional coding digits to the WCO. In the ASEAN region (e.g., Singapore and Malaysia), companies may find that the HS Code sometimes has eight or ten digits, which is designed to meet the further subdivision of local import and export management.
Usage of HS Code in ASEAN
In the ASEAN region, the HS Code plays a vital role in international trade. The following are its main uses:
- Customs Classification and Tax Administration: The HS Code is the standard used by customs in various countries to identify and classify products, facilitating the application of the correct tax rates, duties and regulatory measures between countries.
- International Trade Compliance: The HS Code helps Singapore companies to comply with local import and export regulations when trading across borders in ASEAN and beyond.
- Trade Preferences and Tariff Preferences: In the ASEAN Free Trade Area (AFTA), HS Code also helps companies determine whether their products are eligible for tariff preferences, such as zero tariff treatment.
- Monitoring and Trade Data Analysis: HS Code supports the tracking of merchandise flows between ASEAN countries, enabling governments and businesses to accurately analyze trade data and make economic decisions.
Apart from ASEAN’s AFTA, Singapore also has Free Trade Agreements (FTAs) with a number of countries, including:
- Singapore-China Free Trade Agreement (CSFTA): provides preferential tariffs on a wide range of goods, helping to boost trade between Singapore and China.
- Comprehensive and Progressive Trans-Pacific Partnership (CPTPP): a cross-regional agreement covering a number of Asia-Pacific countries such as Japan, Canada, Australia, etc. It provides Singaporean companies with easy access to these markets.
- EU-Singapore Free Trade Agreement (EUSFTA): provides tariff reductions for imported and exported goods, especially industrial goods, to give Singapore companies easier access to the EU market.
- Regional Comprehensive Economic Partnership Agreement (RCEP): covers ASEAN countries and partners including China, Japan, South Korea, Australia and New Zealand, building one of the world’s largest free trade areas.
All these FTAs allow eligible goods to enjoy tariff reductions and exemptions, and Singapore companies can apply for the relevant benefits through proper HS Code classification to enhance their competitiveness in the international market.
Note: The above Free Trade Agreements (FTAs) may be adjusted or updated due to various reasons, such as changes in national policies, economic situation or international relations.
How to Get The Correct HS Code?
Determining the correct HS Code for your goods can be complicated, but here are a few ways to help Singapore businesses easily find the right HS Code for their products:
- Get clear information about the product: To accurately find the HS Code, it is important to first know the details of the product, including the material, use and category of the product. For example, a cotton shirt and a synthetic fibre shirt may have different HS Codes.
- Use online tools: Applicable HS Codes can be found by searching through Singapore Customs’ Tariff Finder tool or ASEAN-related websites by entering the product keywords directly.
- Check the WCO database: WCO (World Customs Organization) has a global database of HS Codes, which can be accessed through its official website to view the latest information on International Standard Codes.
- Refer to local customs classification rules: Some national customs provide special classification rules or explanatory notes. For example, Singapore Customs has issued a document of explanations and product-specific case studies that can help companies find the applicable HS Code more accurately.
- Consult a professional: If you are unsure, it is always a good idea to consult a freight forwarder or customs broker who has experience in providing precise guidance and help avoid fines, delays or tariffs due to misclassification.
- Regularly update the HS Code: The HS Code is updated every five years, and companies need to make sure they are using the latest version. The latest version is currently updated in January 2022, and businesses are advised to keep an eye on announcements from WCO or Singapore Customs.
HS Code Related Documents
When trading across borders in Singapore, it is crucial to accurately label and declare the HS Code to ensure smooth customs clearance of goods and compliance with regulations in various countries. Here are a few key points for companies to note:
1. Customs Documentation Preparation: Typically, the HS Code needs to appear on all major customs documentation for imports and exports, such as:
- Commercial Invoice: Lists the details of the goods and the HS Code for each item.
- Packing List: For larger orders, the packing list can be displayed on items with the corresponding HS Code to help customers quickly verify the goods.
2. Submission to Customs Declaration System: Singapore companies can fill in the HS Code of the merchandise when filing the declaration through TradeNet or other international customs declaration systems in Singapore for automated data transfer and fast processing. The TradeNet system requires the HS Code of all imported or exported merchandise, so it is important to ensure that the HS Code is accurate in each declaration.
3. Labelling Styles and Requirements: In markets or regions with special requirements (e.g., some regions within the ASEAN countries), HS Code labels may be required to conform to a specific format, and it is recommended that you check or consult with your Customs agent beforehand to ensure that the labels look the way they are intended to look.
4. Accompanying Documents: In some cases, in addition to the HS Code, supporting documents such as a detailed description of the merchandise, product pictures, and a list of ingredients are required to help Customs more accurately confirm the classification of the goods. Particularly in the case of complex products (e.g., mixed ingredients or multifunctional devices), such documentation can help minimize delays or costs associated with misclassification.
Finding Cheap and Reliable International Delivery Solution?
For Singapore businesses, understanding and using the correct HS Code is key to ensuring smooth import and export. An accurate HS Code not only helps companies comply with international trade regulations and minimize the risk of errors but also allows them to effectively utilize the FTAs, thus saving costs and speeding up customs clearance.
