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Understand harmonized system tariff codes

This article applies to:AvaTax

Customs authorities use Harmonized System (HS) tariff codes to calculate tariff rates for all internationally traded products. Unlike sales and use tax codes, tariff codes aren't universal. Assign fully qualified tariff codes to the products that you sell internationally to calculate customs duties and import taxes.

In AvaTax, parent products are classified with a tariff code and any child SKUs inherit that classification.

"Fully qualified" codes

A tariff code that includes the country-specific identifier is often referred to as a fully qualified tariff code. These codes contain more than six digits. In AvaTax, line items must have a fully qualified tariff code to calculate customs duties for the destination country.

Anatomy of a tariff code

Tariff codes are unique. The first six digits are universal for all countries that observe the Harmonized System, but the final four or six digits are country-specific.

  • Chapter
    The first and second digits broadly categorize the product. For example: "Articles of apparel".
  • Heading 
    The third and fourth digits define the product further. Continuing our apparel example: "T-shirt".
  • Subheading
    The fifth and sixth digits describe the product in greater detail. Continuing our t-shirt example: "Made of cotton".
  • National Identifier
    The final four to six digits are country-specific. The national identifier applies the correct tariff rate for the item at its shipping destination.

Example:

HS-Code-Graphic.png

 

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