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How To Choose An HTS Number For Imports?
Last Updated on: November 15th, 2024
An HTS number is nothing but an undifferentiated 10-digit number that identifies the duty or tariff tax applied on items that are usually imported into the USA from different countries. The full form of HTS is Harmonized Tariff Schedule and is incurred by CBP or Customs and Border Protection.
After you get an answer to your question about what is an HTS number, then you’ll want to know how to choose an HTS number for your imports. This can be challenging because getting the right classification requires some knowledge of the rules and regulations that govern HTS import codes.
Correctly classifying your products is critical to ensure you pay the correct amount in tax and duties, as well as for ensuring a smooth path through customs. Here are some tips on how to choose an HTS number for imports.
Know The HTS Number Structure
Before you can choose an HTS number for your imported products, you need to understand the number’s structure. The first two digits of the HTS number are for the chapter, which is essentially the general category under which your products fall. For example, chapter 95 is for toys, sports as well as games equipment. As you can probably tell, a lot of products fall under that general category.
The next two numbers are for the heading, which is similar to a subcategory. In the 95th chapter (games, toys, and sports equipment), you might sell video game consoles like the Xbox, so you would use a header of 04, which represents “Video game machines and consoles, along with the parlor or table games, including billiards, pinball machines, amusement machines operated by coins, special tables for casino games and automatic bowling equipment, banknotes, bank cards, tokens or by any other means of payment.”
Indication Of The 04 Heading
The 04 heading encompasses many items, so you’ll need the next two digits to narrow your product code down even further. In the case of video game consoles like the Xbox, digits five and six would be 50 because that subheading is for “video consoles and machines, other than those of subheading 950430.” Subheading 30 is for “additional games, operated by banknotes, coins, bank cards, tokens or by any other medium of payment, apart from the automatic bowling alley equipment,” so because the Xbox doesn’t take payments, it must fit another subheading.
Seven And Eight Digits
Digits seven and eight are for the United States only and are known as the rate line. In the case of video consoles like XBox, these numbers would be 00 because there is no additional rate line. But in many cases, there are two additional digits to help determine special tax rates and duties. The United States may also use digits nine and 10, which are primarily used for data collection.
How Do HTS Codes Function?
HTS numbers are usually located in individual HTS PDFs dedicated to each chapter which are easily downloadable on the website of HTS. you might require to switch off any ad blockers if you wish to get complete functionality. Each HTS chapter consists of a two-digit number.
In Chapter 9, all products are classified in this chapter and begin with the similar two digits that are 09. Four-digit headings are usually found under the same two digits and are classified under the Heading/Subheading sections. As you keep moving down, a set of specific classifications having 10-digit HTS numbers might be found.
In the HTS, one might usually find three duty rate types: the Ad Valor em, Compound, and Specific. Knowing about the HTS number of a product helps an entrepreneur to offer a tax rate on its import into the United States. Further, it might also offer insight into the finest places for sourcing your products effectively.
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What Issues Should Be Avoided With The HTS Code?
If you are well aware of how to read and comprehend the HTS code, there are lesser possibilities of errors. However, there are a few things to consider for any business owner while importing products into the USA:
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Choose The Right Code, Not The Most Advantageous Code
Your products might feasibly “fit” under several headings or subheadings, but it’s your responsibility as the importer to choose the one that is most correct. You should not choose a code that sort of fits your product just because it has a lower tariff rate, as this could be considered fraud. Choosing the incorrect HTS code can have various penalties, from 5% of the product’s value to 100% of the product’s value, depending on whether the error was due to negligence or if it was intentional.
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The Correct HTS Code Is Your Sole Responsibility
Along with the export concern, you have to communicate with both the freight forwarder and the supplier. Each entity is needed to announce the HTS codes of the goods they are importing and exporting, respectively. But since you are the “importer of the entire record,” it is your sole responsibility to optimize the correct HTS code. Ensure you conduct research and verify the codes you have been given in the HS to maintain their perfection.
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Beware Of Trade Programs And Agreements
The USA consists of trade agreements that lead to reduced or no tariffs at all on particular goods. There might be a possibility of these trade agreements getting changed. One can easily find it on the HTS under Special Column 1 section. If you want to get more details on the terms and conditions, refer to the HTS general note category. Its implementation might help you in obtaining selective tariff treatment and comprehend different trade agreements.
Conclusion
There are various ways to select your product’s HTS number, from choosing it yourself off the official government-issued list to having a service choose it for you. Whichever way you go about finding your code, make sure it’s the right one to avoid penalties.
Make sure you know every small detail about the HTS code so that there is no delay while importing the goods.
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