ICV Certificate

The ICV certificate is granted to certified companies after analyzing their economic contribution to the local area. ICV Certified companies receive advantages during the awarding of contracts and tenders based on their ICV score. Reyson Badger assists companies in getting ICV Certificate in Dubai, and to improve their ICV score which acts as a crucial element in tender evaluation and award process. 

The ICV Program

The National In-Country Value (ICV) Program, an integral initiative under the UAE government's "Projects of the 50" vision, is designed to support economic growth and sustainability by optimizing government procurement and encouraging leading national companies to invest in local industries and services.Lead by the Ministry of Industry and Advanced Technology (MoIAT), the program aims to reduce dependency on imports by promoting domestic manufacturing and procurement, thereby enhancing the UAE's economic resilience. It emphasizes the localization of supply chains, supports the development of new industries, and encourages innovation and competitiveness in vital economic sectors. Through initiatives like The Industrialist Career Exhibition, the ICV Program also empowers Emirati entrepreneurs and enhances the skills of local talent, driving job creation and economic diversification. By motivating investments in advanced technologies and sustainable practices, the program not only strengthens the UAE's industrial capabilities but also positions the country as a preferred destination for both local and foreign investments, contributing significantly to national GDP growth and long-term economic sustainability.

Objectives

The ICV Program aims to:

• Localize Supply Chains: Reduce reliance on foreign imports by strengthening local supply chains.
• Develop Local Industries and Services: Encourage the establishment and growth of new domestic industries and service sectors.
• Stimulate Foreign Investments: Attract foreign investments by creating a favorable business environment.
• Diversify the Economy: Move away from oil and gas dependency by expanding into various other sectors.
• Create Private Sector Job Opportunities: Generate valuable employment opportunities for Emiratis in the private sector.
• Augment GDP Growth: Contribute to the growth of the national GDP through increased local economic activity.
• Improve R&D and Technology Spending: Promote innovation and technological advancement through enhanced research and development investments.
• Increase Private Sector Contribution: Encourage greater participation and impact from private enterprises in the national economy.

Stakeholders

The program operates within a broad network of stakeholders, including:

• ICV Certifying Bodies: These entities, authorized by MoIAT, conduct technical reviews and issue ICV certificates based on companies' compliance with program requirements.
• ICV Certified Companies: Businesses that receive the ICV certificate after demonstrating significant contributions to the local economy, gaining competitive advantages in tendering and contracting processes.

ICV certificate 

The In-Country Value (ICV) Certificate is a key initiative in the UAE aimed at enhancing local economic contribution by evaluating and certifying companies based on their financial impact within the country. Issued by authorized certifying bodies, the ICV Certificate assesses factors such as local manufacturing, procurement, and the employment of Emiratis. Companies seeking certification must provide data from their most recent audited financial statements, which must comply with IFRS standards and be no older than two years. Once certified, companies benefit from improved prospects in government tenders and contracts, as their ICV score directly influences their competitive edge. The certificate is valid for 14 months, promoting continuous adherence and contribution to the UAE's economic goals 

Guidelines for Obtaining an ICV Certificate in the UAE

The process of obtaining an In-Country Value (ICV) Certificate is crucial for companies seeking to enhance their competitive edge in the UAE's public procurement and tendering processes. Here are the key guidelines to follow:

• Empaneled Certifying Bodies: ICV Certification in the UAE can only be issued by approved Empaneled ICV certifying bodies. Ensure that your certifying body is recognized to avoid any invalidation of your certificate.
• Separate Certificates for Each Business License: Each business license a company holds requires its own ICV Certificate, as each license is treated as a distinct legal entity. For companies with multiple branches under one license, a single combined certificate will suffice.
• ICV Certification Templates: Applicants must accurately complete the ICV Certification Templates. All figures must come from the company’s latest IFRS-compliant audited financial statements, which should be no older than 2 years. Newly established companies (less than 10 months old) may use figures from their Management Accounts, provided these accounts are no older than 9 months. If older, they must be audited by an approved audit firm.
• Validity Period: An ICV Certificate is valid for 14 months from the issuance date of the audited financial statements. Companies may apply for a new certificate before the end of this period and can use the same financial statements if necessary. An updated certificate does not nullify the previous one.
• Consistency with Certifying Body: Once a company appoints an Empaneled Certifying Body, it cannot switch to a new certifying body during the certification period unless there is a valid reason.
• Submission Requirements: Submissions must include all costs and revenues for the company’s financial year. All figures in the ICV Template should be in AED, with exceptions only if explicitly allowed.
• Documentation and Verification: Every figure in the ICV Template must be supported by relevant documentation. A designated representative from the participating entities may request a quality review of the ICV Certificate Template at any point during the verification process. The certifying body and the supplier must provide any requested information.
• Penalties for Non-Compliance: Negligence or tampering in the submission can lead to penalties, including a ban on doing business with ADNOC.
• Bidding and ICV Score: Once certified, companies can submit bids to participating entities. The ICV score determines the competitive edge in the bidding process.

By adhering to these guidelines, companies can efficiently obtain and maintain their ICV Certificates, thereby enhancing their business opportunities within the UAE market.

Who needs an ICV Certificate?

An ICV Certificate may be acquired by any company, whether located inside or outside the UAE, in compliance with the ICV guidelines. As part of the National ICV Program, 

Tier 1 Suppliers:

• These are suppliers who directly provide goods or services to the partners of the National ICV Program.
• Tier 1 suppliers are often required to declare their ICV Score as it is a crucial component of their tender evaluation and award process.

Tier 2 and Below Suppliers:

• These suppliers provide goods or services to Tier 1 suppliers.
• They may also need to obtain an ICV Certificate to ensure competitiveness in their tenders with Tier 1 suppliers.

ICV Score & it’s importance

The ICV (In-Country Value) score is a measure used in the UAE to evaluate the economic contribution of companies operating within the country. It's calculated based on several factors that reflect how much a company contributes to the local economy. Here are the key points considered and how they contribute to the ICV score:

• Manufactured Goods (for suppliers with an industrial license): Companies are awarded points based on the value of goods manufactured locally.
• Third-Party Spending (for suppliers with non-industrial licenses): Points are awarded based on the amount spent on goods and services procured locally.
• Investments: Points are awarded for investments made within the UAE.
• Emiratization: Points are awarded based on the percentage of Emirati nationals employed by the company.
• Expatriate Contributions: Points are awarded based on contributions made by expatriate employees.
• Revenue from Outside the UAE: Points are awarded based on revenue generated from outside the UAE.
• Emirati Head Count: Points are awarded based on the number of Emirati employees.
• Investment Growth: Points are awarded based on the growth in investments within the UAE.

Each of these factors has a specific formula for calculating points, and the total ICV score is the sum of points obtained across all these categories. Companies with a higher ICV score are often more competitive in winning government tenders and contracts in the UAE.

How is the ICV Score Calculated in UAE?

The ICV (In-Country Value) Score in the UAE is a metric used to evaluate the economic contribution of companies operating within the country. The calculation of the ICV score varies depending on the type of business—whether it's a manufacturer, supplier, or investor. Here's an overview of how it's calculated for each:

• General ICV Score Calculation:

The ICV score is typically calculated as a percentage of a company's total spend within the UAE relative to its total revenue. 

The formula is: 

ICV Score = (Total Spending in UAE / Total Revenue) x 100

This formula gives an overall measure of how much of a company's economic activity occurs within the UAE.

• ICV Score Calculation by Business Type:

For Manufacturers within UAE:

ICV Score = (Manufacturing costs incurred within the UAE + Emirati cost + 60% of Expat Cost) / (Total Cost)

This formula considers costs directly related to manufacturing operations within the UAE, Emirati employee costs, and a portion of expatriate employee costs relative to total costs incurred.

For Suppliers within UAE:

ICV Score = (Value of Purchase x ICV of the supplier + Emirati Costs + 60% of Expat cost) / (Total Cost)

Suppliers calculate their ICV score based on the value of purchases made from local suppliers, multiplied by their specific ICV rating, and considering Emirati and expatriate employee costs relative to total costs.

For Investments within UAE:

ICV Score = Net book value of assets within the UAE / Net book value

The ICV score for investments reflects 25% of the total assets owned by the company within the UAE, demonstrating commitment to local economic development.

These formulas highlight how different aspects such as local spending, Emiratization, and investments contribute to the overall ICV score, providing a standardized measure of economic localization and contribution within the UAE market.

How to Improve the ICV Score?

Improving the ICV (In-Country Value) Score involves strategic actions that enhance a company's economic contribution and localization efforts within the UAE. Here are key strategies:

• Local Sourcing: Use local suppliers for goods, services, and raw materials to support the local economy.
• Emiratization: Hire UAE nationals and support their development through training and mentorship programs.
• Investment in UAE: Establish local manufacturing capabilities or invest in infrastructure and service sectors within the UAE.
• Community Engagement: Participate in community programs, sponsor local events, and support social and environmental initiatives.
• Technology Transfer: Share technological knowledge and skills with local organizations, fostering innovation and capability development.

Implementing these strategies as part of an ICV Improvement Plan demonstrates a company's commitment to local economic growth and sustainability. By actively enhancing their ICV score, companies can strengthen their competitiveness in bidding for government contracts and tenders in the UAE market.

Eligibility to Get ICV Certificate

To qualify for an ICV (In-Country Value) Certificate in the UAE, companies must meet specific criteria outlined by regulatory authorities:

• Government Tender Participation: Companies aiming to participate in tenders with UAE government or semi-government entities, identified by the Department of Economic Development (DED) and ADNOC, are required to possess an ICV certificate.
• Certification Authority: ICV certificates can only be issued by certified and empanelled bodies authorized by UAE regulatory bodies. These bodies conduct thorough assessments and audits to verify compliance with ICV standards.
• Financial Transparency: All data entered into the ICV certificate template must align accurately with the company’s most recent audited Financial Statements. Audited financial statements must adhere to International Financial Reporting Standards (IFRS) and should not be older than two years from the year of certification. For instance, for ICV certification in 2020, audited financial statements should not be older than 2018.
• Newly Established Companies: Newly established companies operational for less than ten months and lacking audited financial statements may use management records covering up to ten months for ICV calculations.
• Audit Requirements: Management accounts spanning ten months or more are subject to audit by authorized certification bodies to ensure accuracy and compliance with ICV guidelines.
• Certification Validity: Upon successful audit and compliance verification, companies receive an ICV certificate valid for 14 months from the date of issuance of the Audited Financial Statements (AFS).Companies have the option to pursue recertification during this validity period to update their ICV status if desired, with the initial validity period remaining effective regardless of recertification decisions. 

Meeting these requisites demonstrates a company’s commitment to financial integrity, adherence to international accounting standards, and support for the UAE’s economic goals. ICV certification not only enhances eligibility for government contracts and tenders but also strengthens credibility and competitiveness in the local market.

How to get ICV certificate in UAE

To obtain an ICV (In-Country Value) certificate in the UAE, here's a step-by-step guide:

• Prepare Audited Financial Statements: Ensure your company has audited financial statements based on IFRS standards or management accounts for newer entities less than 10 months old.
• Complete ICV Template: Fill out the ICV template accurately with financial and operational data as per the guidelines.
• Submit to Certifying Body: Approach an authorized ICV certifying body in the UAE and submit your completed ICV template along with supporting documents.
• Evaluation Process: The certifying body will evaluate your submission based on criteria such as local spend, Emiratization (hiring Emirati nationals), and economic contribution.
• Receive ICV Certificate: Upon successful evaluation, you will receive the ICV certificate. This certificate is essential for participating in government tenders and contracts within the UAE.

Benefits of ICV Certification in UAE

Here's a concise description of the benefits of ICV (In-Country Value) Certification in the UAE

• Emirati Employment Uplift: ICV programs like ADNOC have facilitated over 1,500 Emiratis finding jobs in the private sector.
• Economic Impact: Certified businesses have contributed over Dh44 billion ($12 billion) to the UAE economy.
• Business Opportunities: More than 3,000 businesses have received ICV certification, qualifying them for government tenders.
• Comprehensive Evaluation: ICV considers investment, Emirati employment, expatriate contributions, foreign income, and local investment.
• Supply Chain Localization: Encourages SME growth by localizing supply chains, enhancing resilience.
• Government Preference: Certified firms preferred in government contracts, fostering competitiveness.
• GDP Diversification: Supports diversification goals by raising private sector participation.
• National Economic Benefits: Strengthens UAE economy through local investment and employment.
• Market Competitiveness: Enhances business reputation and competitiveness in tenders and contracts.
• Sustainable Development: Aligns with UAE’s economic development strategy for long-term sustainability.

Key considerations for obtaining an ICV Certificate?

Based on the key considerations for the National ICV Program, here are the essential points to consider for obtaining an ICV Certificate:

• Audited Financial Statements: Ensure audited financial statements prepared in accordance with International Financial Reporting Standards (IFRS), not older than two years from the certification year, and signed by a licensed auditor from the UAE Ministry of Economy.
• Per License Requirement: Obtain an ICV certificate for each license (legal entity) of the company. If a company has multiple branches in the same Emirate with identical activities and ownership, a combined ICV certificate will be issued for that Emirate.
• Separation of Activities: For companies holding both manufacturing and commercial licenses, maintain separate accounting records for manufacturing and commercial activities. ICV certificates will be issued separately for each license.
• Newly Established Companies: Companies operational for less than 10 months and lacking audited financial statements can use management accounts for up to 9 months for ICV certification purposes.

These considerations outline the necessary steps and compliance requirements for businesses aiming to obtain ICV certification under the UAE's National ICV Program. 

Validity of an ICV Certification

In the United Arab Emirates, the ICV Certificate is valid for 14 months following the date the audited financial accounts are issued.

ICV Certification Consultants in UAE

Reyson Badger stands out as a renowned ICV certification consultant in the UAE, offering complete services customized to meet the needs of businesses aiming to achieve ICV compliance. With over 15 years of experience and a large team of seasoned professionals, Reyson Badger provides reliable auditing and consulting services. We specialize in guiding companies through the complicated ICV certification process, ensuring adherence to strict UAE government regulations. Reyson Badger's expertise extends to developing ICV improvement plans that optimize spending and improve ICV scores, thereby maximizing client competitiveness. Companies can improve their local presence, streamline processes, and support the UAE economy's continued growth by utilizing our ICV consulting.