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Understanding tariffs for import and export

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Before you can think about importing or exporting a product, you need to understand how it is classified for customs tariffs and duty in each market of interest.

The Harmonised Commodity Description and Coding system is generally referred to as the “Harmonised System” (HS). It is a multi-purpose international product classification nomenclature developed by the World Customs Organisation (WCO) and is used to classify traded products.

The Harmonised System comprises approximately 5,000 commodity groups, each identified by a six-digit code, arranged in a legal and logical structure. It is supported by well-defined rules in an attempt to achieve uniform classifications around the world.

The system is used by more than 200 countries as a basis for their customs tariff and for the collection of international trade statistics and duty revenue.

Export

Australia uses an eight-digit code to classify goods for export. The first six align with international classification standards, while the last two digits are specific to Australian exports. The classifications are not static and are subject to change. It is very important to keep up-to-date with any changes as they occur.

The Australian Harmonized Export Commodity Classification (AHECC) is usually updated every January and July and up-to-date versions of the classifications can be found at the ABS Website.

Warning: Failure to properly classify your product could lead to incorrect taxation on your exports and the potential loss of the product.

Customs and Border Protection provides a formal AHECC Advisory Service. This service has been developed specifically for clients who require assistance with the classification of goods for export. For more information, go to AHECC Classification.

Import

Goods imported into Australia require classification under the Customs Tariff Act 1995. Importers need to self-assess the correct tariff classification of goods they import. Penalties may apply for incorrect or misleading information.

Australian Border Force (formerly Australian Customs and Border Protection) has a range of information and resources that will assist you to classify goods including a free tariff advice service. For more information, go to Tariff Classification of Imported Goods.

Warning: Importers need to self-assess the correct tariff classification of goods they import. Penalties may apply for incorrect or misleading information. The penalty on imports can be much higher than exports due to the duty component.

For more information on tariff classification call one of CargoHound’s freight experts on 1300 883 243 or email info@cargohound.com.

Kim Mauch is Co-Founder of CargoHound Australia’s first online freight marketplace.

www.cargohound.com

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