The UAE government is taking decisive steps to ensure economic growth and development, making it one of the most lucrative countries in the world for domestic and international investments. One such initiative is In–Country Value (ICV Certification) programme, first introduced by the Abu Dhabi National Oil Company (ADNOC) in 2018. The programme encourages economy diversification through increased local content across various sectors. In cooperation with Ghadan 21 and the Abu Dhabi Department of Economic Development (ADDED), the ICV certification system was further expanded to become a comprehensive system for all suppliers registered in the UAE.
If you are an entrepreneur eyeing business opportunities here, you may be wondering if your company needs ICV certification. This article will discuss some of the most common questions about ICV certification and its effects on businesses in the UAE. Let’s get started!
The certificate is valid for 14 months and can be renewed thereafter. During this period, the certifying body will periodically assess the business’s commitment to in–country value.
A business in the UAE is assigned an ICV score which reflects the percentage of local content in its goods and services. This value is determined by criteria such as product value, employed national workforce, R&D expenditure and contribution to regional economic development.
The ICV score is calculated based on several criteria which play a major role in driving economic growth and development in the UAE. These are:
- Manufactured Goods and Third Party Spending: These refer to the cost of goods and services incurred by the company compared to the total cost. These are the most important factors that influence an ICV score.
- Investments: This refers to the net book value of assets in the UAE, such as property and equipment.
- Emiratisation: This refers to all costs related to hiring, training, and employing UAE Nationals.
- Expat Contribution: This refers to the number of expatriates employed by the business.
- Bonus: This covers other factors like revenue outside the UAE, investment growth, and Emirati headcount.
Check out the ICV formula preview here. Download the template directly from MOIAT’s website.
Is an ICV Certificate Mandatory?
Having an ICV certification is not mandatory, yet for those aiming to bid in government tenders it’s highly recommended. This is because most public sector contracts and tenders assess a business’ ICV score as part of their evaluation process.
Companies with higher scores have greater opportunities of being awarded government deals, while companies without a certificate may be at a disadvantage compared to other bidders who do.
Government tenders are contracts for large–scale projects administered by government departments or entities, such as infrastructure development and the provision of services and supplies.
To ensure they award the right bid, government entities typically invite bids from companies who meet their project requirements, including a company’s ICV score.
Public sector contracts provide businesses with a wealth of benefits, from competitive rates and long–term stability to access to resources and funding.
The government may even offer additional support, such as financial assistance or preferential treatment to those who secure them.
The ICV programme offers numerous advantages to the economy of the UAE. To comprehend why government entities in this region pursue an ICV certificate, here are some of its most noteworthy benefits:
The ICV program incentivizes businesses to up their game in terms of locally–sourced goods and services, aiming to jumpstart the domestic economy. To maximize their ICV score, companies should make every effort to prioritize local suppliers for all goods and services.
Foreign investments are drawn to the country due to this influx, helping to further develop the nation’s economy.
The ICV programme generates employment opportunities for the citizens of the UAE, where organizations need to hire local talent in order to maximize their rating.
An organization’s ICV score considers both the number of UAE Nationals employed and expats – with a mix of both being allowed as long as they meet criteria set out in the programme.
The ICV programme motivates businesses to increase local content, thereby helping to drive up the UAE’s national GDP. By procuring and producing more goods and services domestically, companies are actively contributing towards economic growth in the country.
The ICV program incentivizes businesses to engage in research and development, driving innovation and enabling them to become more competitive on the global stage.
The ICV programme promotes private sector involvement in the UAE economy, fostering a more diversified and stable economic landscape that is not as reliant on oil revenues. This also contributes to job creation and improved incomes for local residents.
Businesses registered in the UAE have the opportunity to apply for an ICV Certificate, giving them a competitive advantage when bidding on government contracts.
While not compulsory, it is highly recommended – particularly for manufacturing companies and suppliers who can use their ICV score to bid for public tenders.
The MOIAT has streamlined the ICV certification process into four easy steps. To obtain your ICV certificate, simply follow these instructions:
Prepare audited financial statements in accordance with International Financial Reporting Standards (IFRS) that are no more than two years old from the year of certification.
Companies with multiple entities or business licences, such as manufacturing and commercial, must apply for ICV certification for each one; the certifying body will issue an ICV certificate for each licence.
Ensure you accurately complete the ICV template, available on the MOIAT website, as previously demonstrated.
For an ICV certificate, approach one of the certifying bodies authorised by MOIAT. They will review your financial statement and ICV template before issuing the certificate, provided all requirements are satisfied.
Once the assessment is done, a ICV certificate will be issued by the certifying body. This can then be presented to government agencies, employers and other relevant parties as proof of your contribution to the UAE’s economy.
The ICV certification process can seem daunting, with its extensive data requirements. While it is not compulsory, getting the certificate has its advantages; for one, it will help you stand out among suppliers when bidding for government tenders and other contracts.
It also shows potential customers that you are serious about making a meaningful contribution to the UAE economy.
If your business meets the requirements, it’s definitely worth considering getting an ICV Certificate in UAE.
If you are considering obtaining ICV certification, then you must pass a thorough assessment conducted by the relevant governing bodies. This entails submitting documents such as financial statements and other business–related records to verify your local content.
At Virtuzone, we can provide assistance with the entire business setup process in the UAE. From gathering all necessary documents to providing guidance and advice on how best to maximise your score for the assessment process, we have you covered.
We can also help you secure other certificates, important documents and visas needed. Contact us today for a consultation!