HS CODE stands for Harmonized System Code, a unique number assigned to classify all traded goods internationally. Determining the HS CODE of traded goods based on legal provisions and product characteristics is referred to as 'Classification (Nomenclature).’
The reason why accurate classification is crucial lies in the fact that various aspects such as Duty and Tax rates, import/export requirements, exemptions, refunds, and FTA rules of origin are determined by the HS CODE of the goods. Frequently disputes between companies, customs authorities, exporters and importers, and exporting and importing countries arise due to inconsistent classification.
Recently, there have been many cases where Vietnamese customs impose substantial duties, VAT, as well as penalties, for reason of errors in classification. They collect an additional amount, claiming that goods should be classified under a different HS CODE (with higher duty rates) rather than the existing HS CODE (with lower duty rates). Therefore, to avoid the risk of additional collection, it is recommended to conduct pre-determination for major trading items.
By utilizing pre-determination of code and receiving results from General Department of Customs, risks associated with customs audits or claims regarding HS CODE can be avoided. Therefore, we recommend actively utilizing the pre-determination system for goods requiring duty payments like materials not used for export by EPE or not used for processing export.
Applications must be submitted with application forms, detailed product information, and samples(if requested by the customs) within 60 days before importing or exporting the goods
In addtion, to ensure obtaining the expected HS CODE, it is advisable to consult with KEN LOGIS before applying for establishing pre-analysis and planning.