Must-Know Information About Getting an In-Country Value Certificate

Back in 2018, the In-Country Value (ICV) certification program was born in Abu Dhabi, thanks to the Abu Dhabi National Oil Company (ADNOC).  The ICV certification program was meant to meet the following key objectives:

• To increase Emiratis' employment opportunities within the private sector
• To enable GDP diversification
• To transfer knowledge of technology to local companies
• To strengthen local supply chains

Essentially, the ICV certificate a company determines a contractor or supplier's In-Country Value contribution to the economy of Abu Dhabi. The program was met with remarkable success. By December 2019, the ICV certification program helped over 1,500 Emiratis find employment opportunities within the private sector, as well as drove Dh44 billion back into the UAE economy. As such, in early 2020, the Abu Dhabi Department of Economic Development (ADDED), Aldar Properties, and Abu Dhabi Ports partnered with ADNOC to establish a unified ICV certification process for suppliers in the United Arab Emirates (UAE). If you are a supplier or contractor, having an ICV certificate can give you significant advantage over rival companies during the tendering process.  Interested in securing your company's ICV certification? Here are important things you need to know about getting an In-Country Value certificate.

1. Not all businesses in the UAE need to get an ICV certificate.

The ICV certificate is mostly meant to benefit suppliers of the Abu Dhabi government, Abu Dhabi Ports, ADNOC, and Aldar Properties. That means that companies, regardless of their size and operating in Abu Dhabi in the area of governmental or semi-governmental procurements with the above mentioned entities, are eligible to undergo the ICV certification process.

2. Suppliers need to partner with specific vendors to get an ICV certificate.

Presently, there are 22 Certifying Bodies that are authorized to issue ICV certificates. MBG Corporate Services is one of the first and highly sought-after vendors of ICV certification in the UAE.

3. The ICV certification process can be divided into two parts:

Gathering the required documents

The supplier or contractor must put together the following important documents:

• The supplier's audited financial statements
• A comprehensive list of the goods and services that they procure
• Wage Protection System reports

Selecting and working with an authorized Certifying Body

To apply for the ICV certificate, the supplier must take the following steps:

• Contact potential Certifying Bodies and obtain quotations
• Select the Certifying Body to be awarded, based on the presented quotations
• Sign an Engagement Letter

From here, the Certifying Body will then evaluate the supplier using the gathered and submitted documents and the ICV Certification Template.

4. The ICV Certification process follows a specific template or formula.

The ICV Aligned Certification Formula includes the following:

• Manufacturing and Third Party Cost (50%) - This is for the cost of goods and services incurred in the United Arab Emirates, compared to the total cost
• Investment (25%) - This is for the volume and direction of the net book value of the assets owned by the supplier
• Emiratization (15%) - This is for the cost of the training, salaries and benefits received by Emiratis and for the donations made to the Emiratis' development
• Expat Contribution (10%) - This is for the number of expatriate employees hired by the supplier
• Bonus (5%) - This bonus is for other factors such as investment growth, any revenue generated by the supplier outside of the UAE, and a headcount of Emiratis

There are also Enhancements in Considerations for the ICV Certification process:

• International Financial Reporting Standards (IFRS) financials

To issue an ICV certificate, all financials used must be based on IFRS and by a licensed Ministry of Economy auditor.

• Branches eligibility for one certificate

If a supplier has more than one branch operating in the same Emirate and having the same ownership and business activities listed in their licenses, these branches are eligible for one combined ICV certificate.

• Payments to governmental authorities

If the supplier makes payments to government-licensed entities and governmental free zone regulators, they will be considered 100% ICV.

• Credit to mainland suppliers 

If a supplier is based in mainland UAE, they will be awarded a 10% ICV score automatically (for the purpose of ICV calculation).

• Headcount of employees

A supplier's employees in a year will be counted on an average basis.

• Credit of owner salary

If there are Emirati owners who are part of the Wage Protection System, their salary can be included. It will be capped to AED120,000 per month per owner.

• Internal costs

All of a supplier's internal costs, except for depreciation cost, will not be included in the calculations.

• Expiry of the certificate

The ICV certificate is valid for 14 months starting from the date the supplier issues their audited financial documents, or after new financial statements have been issued (whichever is earlier).

4. A supplier must take note of the cost, duration and other details associated with the ICV Certificate.

There is no fixed cost for securing an ICV Certificate. This will depend on the authorized Certifying Body that the supplier will select to perform the ICV Certification process. It takes anywhere between three and 15 business days for a supplier or contractor to receive their ICV Certificate. The length of time could be affected by the size of the supplier being evaluated. As mentioned earlier, from the date that the supplier submits the required documentation for the certification process, the ICV certificate will be valid for 14 months. An In-Country Value Certificate can open doors for suppliers and contractors seeking success in government procurements in Abu Dhabi. Get in touch with the trusted company formation services professionals at MBG Corporate Services, an authorized ICV Certifying company, today.