ICV Certification in UAE: Driving Economic Growth and Compliance
In the Middle East, the In-Country Value (ICV) program has been introduced in Oman, Qatar, Saudi Arabia, and the United Arab Emirates, contributing to the growth of both national and corporate economies. The ICV certificate, initiated by the Abu Dhabi National Oil Company (ADNOC) in January 2018 and effective from April 1, 2018, has proven to be a significant boon to individual suppliers, businesses, and the UAE’s overall economic landscape.
The ICV program encourages local suppliers to focus on obtaining an In-Country Value Certificate, promoting national economic growth. Administered by the Ministry of Industry and Advanced Technology (MoIAT), the national ICV certificate aims to optimize the value of the oil and gas sector in the UAE.
What is ICV Certification in UAE?
ICV Certification is a program launched by ADNOC in the UAE to measure the contribution of goods and services produced within the UAE, local investment, and employment in the oil and gas sector. An ICV Certificate is issued by ADNOC, certifying the level of In-Country Value achieved by a UAE-based company.
ICV Certification in Abu Dhabi and the Abu Dhabi Local Content Programme (ADLC)
The Abu Dhabi Local Content Programme (ADLC), formed by the Abu Dhabi Department of Economic Development (ADDED), has specific goals, including:
- GDP Growth: Promoting GDP growth by sourcing more products and services domestically, expanding foreign direct investment in Abu Dhabi, and boosting contributions to the GDP from the private sector and SMEs.
- Human Capital Development: Increasing Emiratis’ access to private sector employment opportunities and strengthening local labor force competencies.
- Technology Adoption: Raising research and development (R&D) expenditures, boosting national industry competitiveness, and accelerating technological advancement and application.
Which Businesses Should Get an ICV Certification?
All suppliers and contractors of ADNOC and its subsidiaries are required to obtain ICV Certification. This includes companies providing goods and services to ADNOC, such as drilling contractors, engineering firms, and logistics providers. Additionally, companies in other sectors seeking to do business with the UAE government, especially those bidding on government contracts, may need ICV Certification.
Benefits of ICV Certification in UAE
Since its inception, the ADNOC ICV program has:
- Helped more than 1,500 Emiratis find employment in the private sector.
- Contributed over Dh44 billion ($12 billion) to the UAE’s economy.
- Granted ICV certification to over 3,000 UAE businesses.
The program evaluates various factors, including investment, Emirati employment, expatriate funding, income earned outside the UAE, and increased investment. It encourages the creation of new business lines within the UAE and fosters local supply chain components. ICV certification also supports small and medium-sized businesses, stimulates private sector participation, diversifies GDP, and localizes critical supply chain elements.
ICV certificate holders gain advantages, such as priority consideration in government tenders and partnerships with government entities and corporations. ADNOC actively promotes local manufacturing units bidding directly for tenders, giving preference to local manufacturers over foreign agents during the tender evaluation process.
Eligibility to Obtain an ICV Certificate
To obtain an ICV certification in the UAE, companies must meet specific eligibility requirements:
- Registered with the appropriate government agency with a current trade license.
- Physically present in the UAE and engaged in offering products or services.
- Fulfill industry-specific ICV requirements in addition to general qualifications.
- Undergo an independent audit by an authorized ICV certification body.
The ICV certification aims to ensure that certified businesses actively contribute to the growth and improvement of the UAE’s local economy.
How to Obtain ICV Certification in UAE
Companies can obtain ICV Certification in the UAE by complying with the ICV Financial criteria established by ADNOC and submitting their ICV score to ADNOC. This may involve changes in operations, such as increasing local investments, sourcing more goods and services locally, and hiring and training more UAE nationals.
Validity of an ICV Certification
An ICV certification typically has a validity of 14 months from the date of submitting audited financial documents or the issuance of new financial statements, whichever comes earlier. To maintain ICV benefits beyond a year, businesses must renew their ICV certification by submitting revised financial statements and an updated ICV template.
Companies must adhere to ICV criteria throughout the year to ensure that their ICV score meets renewal requirements.
Key Considerations for Obtaining ICV Certification in UAE
Several key considerations for obtaining ICV Certification in the UAE include:
- Financial statements compliant with International Financial Reporting Standards (IFRS).
- Eligibility for businesses with multiple branches under one ownership.
- Inclusion of owner salary credits registered under Wage Protection System (WPS).
- Consideration of internal costs, excluding depreciation.
- Evaluation of the number of employees.
- 10% reward in ICV Score for mainland suppliers.
- Consideration of payments to governmental authorities.
Conclusion
The ICV certification program in the UAE has evolved since its inception, promoting long-term business relationships that benefit both the nation and stakeholders. It has led to strategic growth, GDP diversification, and Emiratization while protecting various initiatives beyond the oil and gas sector. ADNOC ICV certification signifies a commitment to boosting the local economy, offering advantages like special consideration in government tenders and contracts.
