What is Tariff Classification?

Tariff classification is the first and one of the main steps before starting an export or import operation. It is essentially the assignment of an internationally recognized numerical number, called a tariff code, which allows us to identify what type of goods we are dealing with.

The World Customs Organization (WCO) established the International Convention on the Harmonized Commodity Description and Coding System.

“A code number in the tariff classification includes information on charges and taxes on goods, and other import or export restrictions”.

Therefore, all goods must be classified according to a tariff code that includes the following information:

  • rates of customs duties and other taxes applicable on import and export – any appropriate protective measures – (e.g., for example, the rate of import duties and taxes)
  • any appropriate protective measures – (e.g., anti-dumping)
  • international trade statistics
  • import and export formalities, and other non-tariff conditions.

Classification Tariff rates

However, although almost all countries in the world use similar tariff classification criteria, it should be noted that there are several designations that countries use depending on their foreign trade criteria.

These are as follows:

– The Harmonized System Code, or Harmonized System Code (HS Code) used in more than 150 nations. It consists of some 5,000 tariff codes and is made up of six digits. These are grouped into headings and subheadings and then integrated into chapters to form broader sections.

– The Combined Nomenclature of the European Union (CN Code), which consists of eight digits (the six of the Harmonized System, plus two more). In addition, this system collects data on trade within the EU and between the EU and the rest of the world.

– Integrated Tariff Code or TARIC, a ten-digit code also used in the European Union (the eight digits of the Combined Nomenclature, plus two more). This system provides information on all tariff measures in force in the EU, as well as the trade policy applied to certain goods.

It should be noted that the European Union maintains a TARIC database containing explanations of all nomenclatures, as well as customs duties and other measures related to tariff and trade legislation.

Why is it Essential to have an Accurate Tariff classification?

Determining the tariff classification of a good is essential to establish the customs regulations it must comply with during an international transaction.

In addition, it is essential to correctly classify a good to determine the conditions that a country’s customs would impose to allow its entry (import) or exit (export), such as tariff, duties, taxes, licenses or limitations.

In other words, the tariff classification establishes the taxes to be paid by the importer or exporter, as well as the requirements (e.g., limits or limitations) that must be met to import or export the good.

“It is essential to establish an accurate tariff classification to avoid possible customs penalties”.

Similarly, an incorrect tariff categorization can cause the trader to face fines or additional duty assessments from customs authorities.

Worse, it can hinder import or export and even force items to be destroyed or returned to their point of origin.

On the other hand, other variables depend on a correct tariff classification, in this case positive ones, such as the possibility of benefiting from lower tariffs, as in the case of the Generalized System of Preferences (GSP).

Do we classify your Goods?

As mentioned above, the tariff classification of a product is complicated, and it is not always obvious to which heading it belongs.

It is possible that components or parts from other nations have been used in the manufacture of a product, or that the manufacturing process has taken place in several countries. In these cases, several rules and requirements set out in customs legislation must be followed.

For all these reasons, it is recommended that this process be carried out by an experienced customs broker, such as Connecta.

“As a customs broker, Connecta Customs Agency guarantees the accurate tariff classification and, therefore, the effective completion of an import or export operation”.

Our experience allows us to ensure the correct categorization of your products and to advise you on the duties and taxes that will be applied to them depending on their type, origin, and destination.

As customs brokers, we provide tariff categorization services to importing and exporting companies, as this is the first step towards a successful operation.

Finally, the experience of our experts in the complicated customs regulations and international legislation allows us to assist our clients from start to finish in any commercial transaction abroad.

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