Definition

The Harmonized System (HS) Code is an internationally standardized numerical classification system used to categorize traded goods for customs and statistical purposes. Developed by the World Customs Organization, this system is used by over 200 countries worldwide to facilitate international trade, reduce trade expenses, and standardize trade documentation. In Saudi Arabia, the system uses a comprehensive 12-digit code structure as part of the GCC Integrated Customs Tariff implemented in January 2025.

Key Features/Components

• Hierarchical Structure: The 12-digit system includes HS Chapter (digits 1-2), HS Heading (digits 3-4), HS Sub-Heading (digits 5-6), GCC local classification (digits 7-8), and additional sub-categories (digits 9-12)
• Enhanced Classification: The new system expanded from 7,800 to over 13,400 tariff lines, nearly doubling classification possibilities for more precise product categorization
• Universal Application: More than 98% of international trade products are classified using HS codes, making it the global standard for customs procedures
• Integration with Trade Systems: HS codes are seamlessly integrated with customs clearance systems, SABER platform, and regulatory compliance frameworks

Application in KSA

Saudi Arabia implemented the new GCC Integrated Customs Tariff on January 1, 2025, based on the 2022 edition of the Harmonized System. The system is administered by the Zakat, Tax and Customs Authority (ZATCA) and serves multiple purposes including customs duty determination, statistical data collection, and trade policy enforcement. Businesses must use correct HS codes when registering products on the SABER platform, which integrates with the Saudi Food and Drug Authority (SFDA) and Saudi Standards, Metrology and Quality Organization (SASO). The system facilitates seamless customs procedures while ensuring compliance with national and international trade regulations.

Compliance Requirements

Businesses operating in KSA must accurately classify their products using the appropriate 12-digit HS codes for all import and export transactions. Incorrect HS code usage may be considered non-compliance or mis-declaration by customs authorities, potentially leading to wrong tariff applications and additional expenses. Companies must ensure their customs declarations align with ZATCA requirements and maintain proper documentation for audit purposes. With the new GCC Integrated Customs Tariff implementation, businesses should familiarize themselves with classification changes to ensure correct customs duty calculation and determination of non-tariff barriers.

Common Challenges

Classification Complexity: The practical implementation can be challenging due to the high volume of information related to affected products and the complexity of tariff classification according to General Rules for Interpretation. Many businesses struggle with determining the correct 12-digit code, especially for new or specialized products.

System Transitions: The recent expansion from 8-digit to 12-digit codes across GCC countries has created temporary confusion, requiring businesses to update their systems and retrain staff on new classification procedures.

Best Practices

Regular Code Verification: Establish a systematic process to verify HS codes through ZATCA's official website and SABER platform before submitting customs declarations. HS codes are subject to change at any time without prior notice, making the official tariff code on customs websites the authoritative reference.

Professional Support: Consider engaging customs specialists to undertake impact assessments, design compliance-focused action plans, and proactively identify classification deviations to mitigate future risks. Cloud accounting platforms like Mezan provide comprehensive financial analysis tools that help streamline HS code management and efficiently manage financial data related to customs operations.

For expert guidance on Harmonized System (HS) Code classification and compliance, consider consulting with qualified tax and business advisors.