Why Your UAE Business Needs an ICV Certificate?
If you have been exploring “what is ICV certificate in the UAE?” Or “how do I get ICV certificate in the UAE?” then you are at the right place.
Let’s first explore what it all means before we drill down to how you can get it.
The ICV (In-Country Value) Certificate in the UAE is a program initiated by ADNOC (Abu Dhabi National Oil Company) and then expanded to include other government entities and major companies in the UAE.
It has been designed to support the UAE’s strategy of economic diversification and localization of critical supply chain functionalities. This initiative aims to boost the country’s economy by fostering the growth of local businesses while increasing the employment of Emiratis in the private sector.
Why was the ICV setup?
The ICV, In-Country Value Certification program was set up keeping in mind the following goals to:
- Nurture the growth of local goods and services
- Improve knowledge transfer
- Promote local supplier development
- Generate employment opportunities for Emiratis in the private sector
- Ensure the GDP contribution from the oil and gas industry is maximized
Who Needs the ICV Certificate?
If you’re a supplier or a business in the UAE, especially if you’re dealing with certain government entities and major corporations, it is highly likely that you will need to have an ICV certificate.
Here is a list of entities that need the ICV certificate in the UAE:
Suppliers for ADNOC
The program was first initiated by ADNOC, so suppliers, vendors, and contractors involved with ADNOC need the ICV certification as a pre-requisite for tendering.
Other UAE entities that have adopted the ICV program include (but aren’t limited to) the Department of Economic Development, ADDED (Abu Dhabi Department of Economic Development), and Mubadala Development Company. Suppliers for these entities might also require certification.
Companies in Specific Sectors
Businesses in the oil and gas industry, or those indirectly associated with it, are more likely to require the ICV certificate when dealing with major corporations or government entities.
Why Do Businesses in the UAE Need an ICV Certificate?
The ICV (In-Country Value) Certificate in the UAE has grown increasingly significant for businesses operating in certain sectors, mainly due to the following reasons:
One of the primary reasons businesses need the ICV certificate is to participate in tenders. Major entities like ADNOC (Abu Dhabi National Oil Company) and its group companies, as well as other government and semi-government entities in the UAE, require suppliers to have an ICV certification to be eligible for tendering.
Promotion of Local Goods and Services
The ICV program promotes the use of local goods and services. Businesses with a higher ICV score are seen as contributing more to the in-country economy, making them more attractive to major entities and potentially leading to more contract opportunities.
The ICV initiative aligns with the UAE’s broader goals of economic diversification. Companies that show alignment with these goals, through a high ICV score, can leverage their score for better business prospects.
Employment Opportunities for Emiratis
The ICV program also encourages the employment of Emiratis in the private sector. Companies that employ more Emiratis can achieve a better ICV score, which can be a competitive advantage in tenders and contracts.
How to Get an ICV Certificate in the UAE?
Choose a Certified Body
Begin by selecting an auditing firm or body that is certified by the entity you wish to do business with (for example, ADNOC). Only these certified bodies are authorized to carry out ICV audits and provide ICV certification.
Undergo an ICV Audit
The chosen auditing body will then evaluate various aspects of your business to calculate your ICV score. This includes assessing:
- Goods manufactured locally
- Value of third-party expenses
- Local investments
- Employment of Emiratis
- Contribution from expatriate employees
And other relevant parameters.
Receive the ICV Score
Once the audit is complete, the business is provided with an ICV score for that specific fiscal year. This score reflects the business’s contribution to the in-country economy.
Apply for Certification
After obtaining the ICV score, businesses can apply for the ICV certificate. The score is then used by entities like ADNOC during the tendering process to assess a company’s alignment with the ICV program’s goals.
ICV certification isn’t a one-time process. Businesses need to renew their ICV certification periodically, typically annually, by undergoing fresh audits. This ensures that the ICV scores are up-to-date and reflect the company’s current contributions to the UAE economy.
Do I need ICV Certificate if I am in a Free Zone?
The necessity of an ICV (In-Country Value) certificate for businesses in a Free Zone in the UAE largely depends on the nature of their business activities and their target clients. Here’s a breakdown of the situation:
Business Activities and Clients
Even if your business is located within a Free Zone, if you aim to participate in tenders or work directly with certain government or semi-government entities, such as ADNOC, you may still be required to have an ICV certificate. These entities mandate the ICV certification as a part of their supplier selection process, irrespective of where the supplier is based.
Type of Free Zone
Not all Free Zones are the same, and their relation with the broader UAE economic policies can vary. While Free Zones generally offer businesses a degree of independence from the UAE’s federal commercial laws, when it comes to strategic initiatives like the ICV program, certain Free Zone businesses might still need to align with national goals, especially if they interact significantly with the local economy outside the Free Zone.
Nature of Business
Companies in Free Zones that operate entirely within the zone or cater exclusively to international markets might not see an immediate need for ICV certification. However, if there’s any interaction or business dealings with local entities that prioritize or mandate ICV, then obtaining the certificate becomes essential.
Future Expansion Plans
If a Free Zone company has plans to expand its operations or clientele outside the Free Zone in the future, especially within the UAE’s mainland, it might be a strategic move to obtain an ICV certificate in advance. This can streamline the expansion process and provide an edge in securing contracts or partnerships.
While being in a Free Zone might provide certain exemptions and benefits, the requirement for an ICV certificate is driven more by the nature of your business activities, your clients, and your growth ambitions within the UAE. It’s advisable to consult with local experts such as those at Horizon Biz Consultancy, Dubai to get a clear picture tailored to your specific business scenario.
Considering Obtaining an ICV Certificate for UAE Business?
The ICV Certificate is an essential component for businesses wishing to collaborate with major entities in the UAE, especially in the oil and gas sector. It aligns with the broader goals of the UAE to promote economic diversification, grow local industries, and ensure sustainable and diversified growth. If a business is keen on expanding its footprint in the UAE and working with significant players, understanding the ICV program and obtaining the certificate can be crucial.
Get in touch with company setup and corporate tax experts in the UAE at Horizon Biz Consultancy for detailed information on how to obtain the ICV certificate with greater ease.