[Global IDT Insights] EU Duties on Low-Value E-Commerce and UAE RCM on Scrap

Editorial Team – [2025] 181 taxmann.com 887 (Article)

Global IDT Insights provides a weekly snippet of tax news specifically related to Indirect Taxes from around the globe.

1. EU introduces customs duties on low-value e-commerce packages

EU has decided to introduce a customs duty of €3 per item on e-commerce parcels valued below €150, applicable from July 2026. The measure addresses the growing volume of low-value e-commerce imports and aims to mitigate the competitive imbalance between online platforms and traditional retail within the EU.

The duty is designed as a temporary measure under the EU customs reform framework and will apply until the EU Customs Data Hub becomes operational. It is limited to parcels sent directly to EU consumers from third countries and operates independently of the proposed Union handling fee on e-commerce parcels.

Key aspects of this measure include:

(a) Temporary customs duty on low-value direct-to-consumer imports – A customs duty of €3 per item will be imposed on e-commerce parcels valued below €150 that are dispatched directly from third countries to consumers in the EU. The measure targets consignments that are currently exempt from customs duties.

(b) Interim measure pending EU Customs Data Hub implementation – The customs duty is expressly temporary and will apply until the EU Customs Data Hub is established in 2028. The Data Hub is intended to integrate e-commerce-related customs data and provide customs authorities with a comprehensive overview of goods entering and leaving the EU. A permanent customs duty regime will apply once the Data Hub becomes operational.

(c) Implementation through legal and IT framework adjustments – The Council and the Commission are coordinating to enable implementation of the temporary duty through necessary legal amendments and the development of an appropriate IT framework.

(d) Separate treatment from the proposed Union handling fee – The €3 customs duty is distinct from the proposed Union handling fee on e-commerce parcels. While the customs duty addresses competitive distortions linked to duty-free imports, the handling fee is intended to compensate customs authorities for the increased administrative burden of supervising large volumes of parcels. The handling fee remains subject to ongoing negotiations.

(e) Removal of duty exemption for low-value consignments – Parcels valued below €150 and imported directly from third countries are currently exempt from customs duties. The Commission proposed removal of this exemption in May 2023, and the Council adopted this removal on 13-11-2025, calling for its application from 2026 instead of mid-2028.

Source – Official News

2. UAE announces cabinet decision on application of reverse charge mechanism to scrap-metal trading

UAE has issued a cabinet decision providing for the application of the reverse charge mechanism (RCM) to trading of metal scrap between registrants for VAT purposes. The decision introduces a sector-specific VAT accounting measure aimed at addressing risks associated with scrap-metal transactions.

The decision applies to eligible supplies of metal scrap between VAT-registered persons and reallocates the responsibility for VAT accounting from the supplier to the recipient, subject to prescribed conditions and procedural requirements.

Key aspects of this decision include:

(a) Application of RCM to eligible scrap-metal supplies – The RCM will apply to supplies of metal scrap made between registrants within the scrap-metal sector. Under this mechanism, the supplier will not charge VAT on the supply. Instead, the responsibility to account for VAT will shift to the recipient.

(b) VAT accounting obligation placed on the recipient of scrap metal – Where the RCM applies, the recipient of the metal scrap becomes responsible for accounting for the VAT due on the supply. This applies where the recipient acquires scrap metal either for resale or for processing into materials used in the manufacture of new products. The recipient must also fulfil all VAT obligations arising from the supply.

(c) Procedural requirements for suppliers and recipients prior to supply – The decision requires the recipient to provide a written declaration to the supplier confirming that the metal scrap is acquired for resale or processing and that the recipient is registered with the Federal Tax Authority. The supplier must obtain and retain this declaration, verify the recipient’s registration status, and clearly state on the tax invoice that the RCM applies.

(d) Objective of addressing fraud and improving VAT administration – The RCM is intended to reduce tax fraud in the scrap-metal trading sector and improve the efficiency of VAT refund administration. The measure builds on the application of a similar mechanism in other sectors, including electronic devices, gold, and precious metals.

(e) Alignment with UAE tax policy objectives – The decision forms part of broader efforts to strengthen the efficiency of the VAT system, promote tax fairness and voluntary compliance, and enhance transparency. It also supports the objective of maintaining a competitive and trusted business environment within the UAE.

Source – Official News

Click Here To Read The Full Article