The HS code is important when it comes to the import and export of solar panels in Nigeria. The HS code helps to differentiate solar panels that are exempted from the custom import duties (VAT). The Harmonised System Code, or HS code, is an internationally standardised system of numbers used to classify traded products, like solar panels. Just like supermarkets use barcodes to specify products, hence helping you to know what product you are buying, Nigerian customs use HS codes to know what you are importing or exporting. The HS code is maintained globally by the World Customs Organisation (WCO).
The HS code is very important because when you use the correct code when importing solar panels into Nigeria, customs won’t charge you for import duties because solar panels are VAT-free. However, if you use the wrong HS code, you will be charged VAT on your importation, which will increase your overall importation cost and subsequently affect your business.
In order to ensure that you get the correct HS Code for solar panels in Nigeria, we have designed this comprehensive article to guide you on the meaning of the HS Code, the correct code to use, its importance, and the implication of misclassification for solar importers, stakeholders, and interested Nigerians.
What Is an HS Code?
In the simplest term, HS Code stands for Harmonised System Code. It is an internationally standardised system of numbers used to classify traded products, like solar panels.
In other words, you can see it as a global ‘barcode’ for goods. If you have been to a supermarket that uses barcodes to help them know what you are buying, the HS Code is like that because the Nigeria customs uses this unique code to know the product you are importing or exporting. The HS code is a global coding system that is maintained by the World Customs Organisation (WCO). In fact, the HS code is used in over 200 countries globally, including Nigeria.
The HS Code international standard is usually a 6-digit number. However, some countries can extend theirs to 8 to 10 digits for national purposes (like tax, duties, or trade policies). These HS Codes, 8541.42.00.00 and 8541.43.00.00, are subject to 0% duty and VAT-free import according to the ECOWAS Common External Tariff (CET) for 2022-2027.
HS Code for Solar Panel in Nigeria
The Harmonised System Code for solar panels in Nigeria is 8541.42.00.00 and 8541.43.00.00. This code is used by Nigerian customs to exempt solar panels from import duties since solar panels are VAT-free. Once you use this HS code when importing solar panels into Nigeria, you won’t pay for VAT again, but if there is misclassification, you may be charged import duties.
Meanwhile, the two HS codes are further classified into:
- HS Code 8541.42.00.00 is for all solar cells, whether they are assembled or not into modules or made up into panels
- HS Code 8541.43.00.00 is mainly for photovoltaic cells assembled in modules or made up into panels
Your clearing agent or customs broker usually helps you identify the exact extended code, depending on how your solar panels are shipped.
Why HS Code for Solar Panels Is Important
The importance of HS Code for solar panels cannot be overemphasised, especially for importers and exporters. Some of the reasons why the HS Code is indispensable are:
- It is used for customs clearance
- It is used to determine the import duty and VAT for products.
- With the right solar panel HS code, you can enjoy trade incentives like tax exemptions.
- The HS Code is also important for international trade.
How Nigeria Uses HS Codes for Solar Panels
In Nigeria, the Nigeria Customs Service (NCS) applies the Harmonised System but often uses an extended version called the ECOWAS Common External Tariff (CET).
For solar panels, the ECOWAS tariff aligns with international HS Code 8541.40, but duty rates may vary.
In many cases, import duty on solar panels in Nigeria is zero per cent (0%) because of government incentives for renewable energy. But VAT (Value Added Tax) may still apply.
This is why you must check not just the HS Code but also the customs duty and VAT rates linked to your solar panels.
Conclusion
The HS Code is a unique set of numbers that can be between 6 and 10 digits that are used to classify traded products. It is an internationally standardised system, and it can be likened to the barcode used in different supermarkets to identify specific products.
The HS Codes for solar panels in Nigeria are 8541.42.00.00 and 8541.43.00.00, which are for all solar cells, whether they are assembled into modules or made up into panels and photovoltaic cells assembled in modules or made up into panels, respectively. With this HS Code, solar panel importers in Nigeria can enjoy trade incentives like tax exemptions.