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Commodity code changes 2022

What are commodity codes?

The concept of commodity codes has been agreed on between over 200 economies globally, it is essential in creating a consistent and easier way for goods to be traded internationally. The codes are a series of numbers which are needed to be assigned to any goods flowing in and out of a country. The number is unique to detect the type, style, material, and colour of the product. Not only that but other uses of a commodity code are to detect whether the good needs an import license, if its eligible to apply for preferential duty ratings, all the duty and VAT ratings that will be charged for the product and if any anti-dumping laws apply to the product. The codes are reviewed every 5 years by the World Customs organisation, which is built up of 183 representatives of different customs administrations worldwide, these codes are responsible for classifying 98% of the goods moving around the world.

Why are there new commodity codes?

New commodity codes came into effect on the 1st of January this year. The change of HS (harmonised system) codes, which are the first 6 digits of the commodity codes were last changed in 2017. The change of codes has seen 351 changes, these include…

• New subheadings

• New special previsions on specification

• Recognising new trading patterns

• Modified article descriptions

• New or revised legal notes

• New headings

Who do the changes affect?

Changes in commodity codes will affect all firms that import or export goods. Failure to provide correct updated commodity codes may result in goods being delayed or seized. Because commodity codes determine VAT and extra duty ratings, if an incorrect commodity code is used and VAT payment is less than it would have been if the correct code were used firms may be subject to extra fees and charges. Updated commodity codes are available to view through websites such as customs info database which allows you to view international HS codes for your products.

Ways to ensure you keep up with these changes…

It would be advised firms look at supplementary notes for tariffs as clarification for which goods fit within a particular tariff may have been amended. Update any documentation used for declaration, e.g., invoices, reflect the changes to the commodity codes. Be aware of your incoterms, firms that are responsible for importing may have more irrecoverable costs and different duty rates.