In-Country Value Certification in Dubai (ICV) is a program of redirecting high public spending to the UAE economy with a government-driven procedure. It triggers economic performance and also helps the local industries. Though ICV certification is not mandatory, more organizations apply for it since it offers them additional weightage while performing tender assessments.
Obtaining an ICV certificate demands timely adherence to all guidelines. Provision of the certificate lies only in the hands of the ICV-certifying body. What is an ICV certificate in Dubai-UAE? In this blog, let’s discuss everything about ICV certification and the steps to get it.
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What is an ICV Certificate in the UAE? A Detailed Definition
The ICV Certification program was launched in the UAE by Abu Dhabi National Oil Company (ADNOC). Now the ICV program is monitored and managed by MOIAT (Ministry of Industry and Advanced Technology). The approach focuses on analyzing the contribution of goods and services the businesses generate within the UAE–this can range between local investment and employment in the industrial sectors such as oil & gas.
ICV Certificate has the information of the in-country value, which a business operating in the UAE has ICV Certification was formed with the goals listed below by the MOIAT National ICV program:
GDP Growth
Offering GDP growth through sourcing more products and services domestically, thus fostering Foreign Direct Investment in Abu Dhabi, and increasing the GDP contributions for SMEs and the private sector.
Human Capital Development
Improving Emirati’s access to employment opportunities in the private sector and boosting local labor force competencies.
Technology Adoption
It involves raising R&D (Research and Development) expenditures, enhancing national industry competitiveness, and contributing to technological advancement and application.
Which Business Should Obtain an ICV Certification?
ICV certificate has been a significant credential for companies based in the UAE, spanning across industrial segments like oil and gas, ICT, construction, healthcare, etc. All ADNOC contractors and suppliers including its subsidiaries need to have an ICV certificate. This includes the firms that offer goods and services to ADNOC— engineering companies, drilling contractors, logistics providers, and so on.
ICV certification program is also ideal for companies in other segments that wish to do business with the UAE government. For instance, the businesses that bid on government contracts with segments like transportation, construction, and healthcare might be required to earn ICV certification. The collaboration of suppliers with corresponding vendors is required to earn ICV certification. With the help of MOIAT-approved ICV certifying body, you can easily get an ICV certificate in Dubai.
Advantages of ICV Certification in the UAE
ICV certification considers certain factors. These include the employment of Emiratis, funding sourced from expatriates, revenue earned (outside the UAE), growing investment, etc. As an impact of the program, a new business line has evolved, which should be supplied from the UAE.
- ICV certification enhances the private sector’s participation, improves the GDP’s diversification, and localizes the major supply chain parts.
- ICV certification also supports people who own small-sized or mid-sized businesses to expand and improve developments since the supply chains are localized easily.
- ICV certification holders can utilize the benefits of the contract they gain from the Federal authorities and the partner companies.
- MOIAT promotes local manufacturing units that bid directly for specific tenders for the purchase of goods. This improves the ICV score of suppliers and poses benefits along with serving the nation’s economy.
Eligibility to Obtain ICV Certificate
Companies should meet particular eligibility standards to earn ICV certification in the UAE. Let’s hop on to certain aspects you should note to check if you are eligible to gain an ICV certificate.
- If you wish to get ICV certified, your business should be registered with the government agency and you should hold a current license.
- Also, they should be present in the UAE and must be either offering a service or product.
- Organizations should also fulfill the particular ICV requirements that belong to their industry segment other than the general qualifications.
- Each industry sector’s particular ICV program guidelines include the standards the businesses must adhere to for the certification. For example, the ICV program considers many other things including the extent of local content in the products and services they offer, the degree of workforce, regional infrastructure, and amenities.
- Businesses should go through an audit independently conducted by the concerned ICV certification body to obtain ICV certification. The certification body checks the company’s performance and assigns accreditation as per the ICV score while taking the previously set ICV requirements into account.
- The ICV certification obligations are made to ensure that the certified businesses are responsible for the expansion and improvement of the local economy.
Also Read : How to Choose The Best Audit Firms in Dubai – UAE: A Comprehensive Guide
Should You Get an ICV Certificate?
Complicated data requirements raise the concerns of gaining an ICV certificate. Though earning this certification is not compulsory, it has significant advantages, especially for those businesses that focus on participating in secure contracts and government tenders.
ICV certificate achievement helps you boost your business profile, and move ahead of the competition in the procurement phase. It informs the potential clients of your responsibility to contribute the best to the UAE’s economic landscape, which signifies your dedication to economic diversification and local content enhancement.
For businesses that go well with the ICV program’s criteria, ICV certification is the best strategic leap. It not only enhances your opportunity to achieve public sector projects but also puts your business practices aligned with the UAE’s vision to ensure sustainable economic development.
If your organization is poised to adhere to the certification requirements, earning an ICV certificate in the UAE places a step towards exploring new phases of opportunity and defines your investment in the country’s future.
How Can You Earn an ICV Certificate in the UAE?-Steps to Follow
To earn an ICV certification in the UAE, the concerned company should contact and earn quotations from the respective certifying bodies. It should opt for a certifying body and award it as per the quotations earned, followed by signing engagement letter.
To ensure compliance with the ICV criteria, businesses may have to modify their operations. This could be increasing local investments, hiring/training additional UAE nationals, sourcing more goods/services from local suppliers, etc. Now, let’s walk through the ICV certification process:
Release the Audited Financial Records
Releasing the audited financial statements plays an integral part in obtaining the ICV certification in the UAE. The newly set up companies less than 10 months old should use management accounts to create financial reports according to the Financial Reporting Standards (IFRS). IFRS offers globally recognized vocabulary that supports financial reporting. IFRS keeps the company’s transparency high, makes processes reliable and enhances the stakeholders’ credibility.
Fill ICV Certification
A company’s ICV score is defined using the standard form, i.e; ICV template. It records data based on different aspects of a business’s function, including local sourcing, Emirati employment, investment in community amenities, and many other aspects that help in the local economy’s success. During completion of the ICV template, the businesses should clearly follow the ICV program instructions.
Evaluation of ICV Template
The next step is approaching the relevant certifying bodies to assess ICV templates. Independent businesses that have been provided permission by the ICV program to evaluate and certify businesses for ICV compliance standards are defined as the authorized certifying authorities. The certifying organizations possess the tools and knowledge necessary to assess the ICV template and other required materials supplied by the business. After reviewing the information supplied, the certifying authority performs an on-site audit to validate the information.
Receiving ICV Certificate
In this final phase, the certifying authority will issue the certificate after a thorough review of the ICV template and supporting documentation to conclude that the business complies with the requirements of the program.
Also Read : 3 Golden Rules of Accounting – A Detailed Guide
What is the Validity of an ICV Certificate?
ICV certification in the UAE shall be valid usually for a period of 14 months from the date of issuance of the audited financial statements. To keep having the advantages of ICV certification after one year completes, the businesses must work on renewal of the ICV certification.
Companies should first submit the revised financial documents. They should further complete the new ICV template for the entire renewal process to ensure that it follows the program’s standards and guidelines. The certifying authority will then assess the data updated and if the business persists to suit the ICV program needs, issue a renewed ICV certificate. Companies need to stay compliant with the ICV criteria throughout the year to make sure ICV scores meet the renewal requirements.
Key Considerations to Gain ICV Certification in the UAE
If you have chosen to get ICV certification, the following considerations can make it convenient and hassle-free.
IFRS Financials
The financial statements to be delivered for ICV should comply with International Financial Reporting Standards (IFRS) which is the mandatory standard in Dubai.
Branches Eligibility for ICV Certification
A combined ICV certificate can be issued for a supplier with different branches in the same Emirates with identical activities and ownership listed on the licenses.
Owner Salary Credits
The owner’s salary will be added if they are registered under WPS, i.e., Wage Protection System. It will be confined to AED 2,00,000 (excluding bonus) every month per owner.
Internal Expenses
Except for the depreciation expenses, all of the internal costs of the supplier will not be added to the calculations.
Employees’ Headcount
It denotes how many employees are accounted for every year.
Credit to Mainland Suppliers
Considering a supplier from the mainland, they can earn a 10% reward in the ICV score, particularly for trading license. While considering an industrial license, this would be a 50% reward.
Payments to Governmental Authorities
Payments that the supplier makes to the free zone authorities and licensed organizations will be valued as 100% ICV.
Credit for Lease/Rental Payments
For payments that involve direct contracts with the landlords, the company can earn 80% reward in the ICV Score for Lease/Rental Payments.
Credit for Utility Expenses
Payments to Utilities can earn 80% credit, provided the utilities are purchased directly by the company and the invoice reflects the company as the consumer.
Also Read: Documents Required for VAT Registration in the UAE
Conclusion
ICV certification has evolved since its launch and keeps growing. The best ICV auditors work closely with the clients to make sure that their adherence to the ICV criteria is measured accurately and reflects well in their ICV score.
Kreston Menon is a reputed auditing firm in the UAE, offering a comprehensive range of compliance and financial services to businesses regardless of size. Being an approved ICV certifying body, we offer the top ICV certification services to businesses that operate in the UAE. By partnering with Kreston, clients can get an assured and reliable ICV audit process that aligns with the requirements of MOIAT.
- Is ICV certificate mandatory in the UAE?
No. ICV certificate is not a must-have in the UAE, however, it is recommended for companies that wish to bid on legal contracts. Introduced to enhance the performance and sustainability of the industrial sector, it is highly preferred for those who want to apply for governmental and semi-government procurements.
- What makes a good ICV score ?
There is no such ‘good’ ICV score. A high ICV score means a great extent of commitment shown to the local economic contribution and development. Companies can increase their ICV score by investing in the UAE, creating high employment opportunities, and localizing procurement.
- What are the documents you should submit for an ICV certificate?
The documents required for an ICV certificate include Accounts Payable Records, business details, employee information, contractual records, and additional records or documentation, if any.
- Why is ICV certification important?
It lays down the contribution from a contractor or supplier to the UAE economy and the entities with increased scores have more chances of winning government deals. ICV certification can help organizations cut down taxes, and save business costs with incentives, grants, and tax credits.
