Thailand’s HS tariff book is structured to hold an 11 digit HS code. This 11 digit HSN number must be declared to Thai Customs for all imports and exports. As a member of ASEAN, Thailand has harmonised the first 8 digits of its tariff book with the rest of ASEAN member states. However, traders cannot assume that a HS code accepted by Customs authorities in Indonesia for a particular product will also be accepted by authorities in Thailand.
Are HS codes important In Thailand?
As mentioned above, the HS code for a product must be mentioned on the import declaration. The import declaration will be scrutinized by Customs authorities. If the HS code is wrong, there will be challenges posed to the import. Similar to many countries around the world, erroneous classification of products is a common reason for authorities to hold back approvals on imports. Thai Customs officers can also do post clearance audits on companies and if wrong classifications are found in a post clearance Customs audit by Thailand Customs, penalties will be levied.
Don’t be surprised if auditors hit the importer with penalties for imports dating back 2 years.
Why are HS codes important?
HS codes determine duty rates for import. HS codes also determine whether Free Trade Agreements are being used correctly. Hence, HS codes directly determine if the amount of revenue being collected by the tax authorities in Thailand are correct.
Moreover, HS classification also determines licensing requirements in Thailand. Hence, even if Customs does not have a concern with the import, using the wrong HS code will may result in other government authorities stopping the shipment such as Thai FDA.
How can risk be managed?
Risks relating to the wrong classification of products (and declaration of the wrong Thailand HS code) can be managed in a few ways:
- As the importer, you should determine the correct HS code for your product early. You should not wait for your Customs declarant or agent to request this from you. Worse still, you should not expect your declarant to classify the products on your behalf. Even if they do so the liability for penalties to be paid will lie with you.
- Ensure you have documentation describing product information easily available. Even if you are confident that you have classified your product correctly, you should ensure that you are able to respond to any challenges from Customs in a timely manner.
- Be prepared to visit Customs to defend the HS codes declared. The importer must be able to send someone to Customs to explain the use of the GRIs in arriving at the HS codes used for imports or exports. HS classification follows the rules published by the World Customs Organization, attempting to explain or defend wrong codes using “common sense” will usually not end well.
- Do not reapply tariff codes from overseas suppliers. There is no guarantee that they classified the products correctly.
- Apply for a ruling with Thai Customs. Thai Customs accepts tariff classification ruling requests. The cost of applying for a ruling in Thailand is not significant and affordable to most, if not all traders. Ruling submission documents have to be completed and submitted to the classification branch and upon acceptance of documents, the branch will respond within 60 days. It is important to submit extensive documents with an accompany position paper, in order to ensure that Customs officers fully understand the product and its uses.