Unanswered Questions About HS Code for Malaysia

HS codes can be intricate, but there are essentially five core factors that Malaysian exporters need to take note of to have a smooth shipping experience to any country worldwide. In this article, we will address all your HS code queries with five key questions.

1. What is the difference between AHTN and HS Code?

The main difference between the AHTN and HS codes lies in the number of digits and their specific applications.

HS code is a 6 digits universal language and code established by the World Customs Organization (WCO) to standardized classification of traded goods between countries.

The 6 digits serves as the basis for HS code systems in over 200 countries. Most countries expand it to 7-12 digits to meet their specific requirements for classifying goods.

On the other hand, AHTN (ASEAN Harmonized Tariff Nomenclature) Code is a goods classification system established by ASEAN member states to ease trade within the ASEAN community. It has 8 digits, with the initial 6 digits are adopted from the standard HS code, while the last two digits are region-specific, providing extra details for customs officials to assess duties, taxes, and trade regulations within the ASEAN region.

In Malaysia, the HS code, also referred to as the tariff code, comprises 10 digits. It is employed for all shipping and trading activities involving Malaysia and countries outside the ASEAN community. For trade and shipping within ASEAN member states, the AHTN code will be utilized.

2. At which stage does the HS Code come into the picture?

In the shipping process, the HS code is essential before exporting goods or initiating an import. It is required to prepare shipping documents, commercial invoices, packing lists, and shipping bills.

Customs authorities in both the origin and destination countries rely on the HS code to evaluate and oversee all traded goods in cross-border shipments entering or leaving the country.

3. What happens when you submit a wrong HS Code?

Submitting a wrong HS Code in Malaysia carries significant monetary and legal consequences. The three most common issues include:

• Customs Duties Miscalculation: Incorrect HS codes can lead to inaccurate customs duties, impacting overall shipping costs.
• Violation of Customs Regulations: Authorities may view incorrect HS Code submissions as a breach of customs regulations, potentially resulting in the impoundment of goods and an official investigation.
• Legal Repercussions: Local authorities in Malaysia have the right to impose fines, seize goods, and deny future import and export privileges for non-compliance with HS Code regulations.

4. How to get the correct HS Codes?

When determining the accurate HS Code for your goods, there are two reliable tools at your disposal:

1. For local searches, you can use the Royal Malaysian Customs Department's tariff finder.
2. For global searches, involving multiple countries, you can use DHL international HS code finder, MYGTS.

5. As an exporter, do I use the HS Tariff Code for country of origin or for destination?

Exporters should always verify the HS code of the destination country when completing shipping documents or checking customs duties. 

Customs duties chargable and the assessment of shipments are carried out by the customs authorities of the destination country. Whether items are allowed into the country is entirely determined by the importing country, also known as the destination country.

HS code varies by country. While some countries adopt the fundamental 6-digit HS Code—a standardized classification code established by WCO without modification, many have extended it to 7-12 digits to suit their needs. For example, the USA and the UK have a 10-digit HS Code (the 6 root HS code + 4 nation-specific), while India and the UAE use an 8-digit HS Code (the 6 root HS code + 2 nation-specific). Some countries, like China, may even have a 13-digit HS Code.

Hence, it's important to accurately input the right HS code for your goods in the shipping documents. DHL MyGTS provides you with the HS code for both the origin and destination countries at a glance.