Definition

Customs Code refers to the standardized numerical classification system used to identify and categorize goods for international trade purposes in Saudi Arabia. As of January 1, 2025, Saudi Arabia implemented the new GCC Integrated Customs Tariff, which uses a 12-digit Harmonized System (HS) code structure based on the 2022 edition of the World Customs Organization's classification system. This system enables precise product classification for customs duty calculation, statistical reporting, and regulatory compliance.

Key Features/Components

• 12-Digit Structure: The first two digits represent the HS Chapter, digits 3-4 represent the HS Heading, digits 5-6 represent the HS Sub-Heading, digits 7-8 represent GCC local classification, and digits 9-12 provide detailed sub-category classification

• Expanded Classification: The new system increased tariff codes from 7,800 to over 13,400 lines, nearly doubling the number of available classifications for more precise product identification

• Universal Application: The HS code system is used by 200 countries worldwide and covers more than 98% of products in international trade

• Multi-Purpose Function: Customs codes serve for tariff determination, trade statistics collection, rules of origin verification, and regulatory compliance monitoring

Application in KSA

Saudi Arabia's customs authority, managed by ZATCA (Zakat, Tax and Customs Authority), utilizes HS codes through the SABER platform for product certification and compliance verification. The system integrates with regulatory bodies including the Saudi Food and Drug Authority (SFDA) and the Saudi Standards, Metrology, and Quality Organization (SASO). Businesses must use the correct 12-digit code when importing or exporting goods to ensure proper duty assessment and regulatory compliance. The system also impacts Value Added Tax (VAT) and Excise tax classifications, particularly for exemptions and zero-rating applications.

Compliance Requirements

Businesses operating in KSA must accurately classify their products using the appropriate 12-digit customs code before importing or exporting. Companies must perform HS code searches through the SABER portal to identify correct classifications and ensure compliance with SASO standards and Saudi customs tariff regulations. Documentation must include the precise customs code for customs clearance, and businesses should verify that their products meet safety and quality requirements indicated by the classification. Cloud accounting platforms like Mezan provide comprehensive financial analysis tools that help streamline customs code management and efficiently manage financial data.

Common Challenges

Classification Complexity: Determining the correct HS code can be difficult due to interpretation differences, and using wrong codes may result in incorrect tariff application and additional expenses. System Transition: The recent implementation of the 12-digit GCC Integrated Customs Tariff requires businesses to update their classification systems and ensure consistency across GCC member states.

Best Practices

Utilize Official Resources: Use the SABER platform's HS code lookup feature to verify appropriate classifications and ensure alignment with regulatory requirements. Regular Review: Periodically review and update product classifications, especially when introducing new products or when tariff codes are modified, to maintain compliance and avoid classification discrepancies.

For expert guidance on Customs Code classification and compliance, consider consulting with qualified tax and business advisors.