HS and HTS Codes are widely used in the world of international trading. HS Code stands for Harmonized System Code and HTS Code stands for Harmonized Tariff Schedule Code.
HTS and HS Codes were both developed by the World Customs Organization (WCO) and are used to classify and define internationally traded goods. In order to import or export a product internationally, your traded goods must be assigned an HTS Code that corresponds with the Harmonized Tariff Schedule of the country of import.
The difference between an HS code and HTS code is the number of digits within the code. A code with six digits is a universal standard (HS Code) and a code with 7-10 digits (HTS Code) is often unique after the sixth digit and determined by individual countries of import.
Let’s take a closer look at HS Code and HTS Code.
Harmonized System Code (HS Code)
The Harmonized System Code, or “HS Code” for short, refers to a six-digit standard classification code of goods. It’s used around the world and acts as the main way to facilitate the simplification and harmonization of the customs procedure.
Today, customs officers worldwide must use the right HS Codes in order to accurately identify traded products so that they can allocate the correct rate of duty and tax. This helps to clear every commodity that enters or crosses any international borders.
The Harmonized System categorizes about 5,000 commodity groups. Those groups are arranged into 99 different chapters, that are grouped into 21 sections.
Summed up, the six-digit HS code can be broken down into three parts:
- Chapter: the first two digits identify the chapter. It gives a rough indication of the product, and refers to the various chapters of the list. Currently there are 99 chapters. In the example above, the chapter 85 stands for “Electrical machinery, etc.”
- Heading: the next two digits identify the heading, which helps to further identify the specific category within the chapter. In the example above, the heading “01” refers to “Electric motors and generators.”
- Subheading: the last two digits identify the subheading, defining more specific subcategories of the products. In the example above, the subheading “10” refers to “Electric motors, of an output not exceeding 37.5W.”
Countries are allowed to add an extra two to four digits after the six digits to further break down the classification, and those numbers are called Harmonized Tariff Schedule (HTS) Codes.
As a result of the HTS code system, importers are immediately able to establish the appropriate tariff and duty for any given shipment.