ICV Certification: A guide for SMEs to get In-Country Value Certificate

October 31, 2023by Aparna T Nambissan0

ICV-in-country-value

Empowering SMEs: Understand the streamlined processes for ICV certification by the Ministry of Industry and Advanced Technology and the Ministry of Economy.

by Aparna T Nambissan and Ajay D Kaitharan

UAE’s Ministry of Industry and Advanced Technology (MOIAT) in cooperation with the Ministry of Economy (MOE), is luring Small and Medium Enterprises (SMEs) registered under the National Program for SMEs to obtain the National In-Country Value (ICV) Certificate for a nominal fee as low as AED 500. The fee discounts support the ministry’s flagship initiative of Make It in the Emirates (MIITE) in its mission to enhance the industrial sector’s contribution to the UAE GDP to AED 300Bn by 2031.

Background and Objectives of ICV

“Make It in the Emirates” is a bold initiative by the United Arab Emirates government to encourage companies to develop and manufacture products in the UAE. Driving this initiative from the front is the Emirates Development Bank which has already committed to supporting 13,500 large companies and SMEs in the UAE with an AED 30 billion fund.

The National ICV Program launched in 2021, is a cornerstone of the UAE’s economic strategy aimed at enhancing the competitiveness of products manufactured in the UAE across regional and international markets. Originally introduced by ADNOC in Abu Dhabi in 2018, the ICV certification program was later adopted by other government institutions across the UAE. The ICV certification is the UAE government’s recognition for the company’s localization of its production process through investment in the country’s localized workforce and manufacturing capacity, as reflected in the ICV Scorecard.

The ICV score remains an optional requirement when bidding for federal government tenders and contracts. However, entities with ICV Certification get a significant preference, based on their ICV score.

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How is the ICV Score calculated?

The ICV score is calculated by assigning proportional weightage to four major components of the business expenditure category:

  • Manufacturing Cost & Third Party Spend – 50% of the total weightage.
  • Investment –25% weightage.
  • Emiratization – 15% weightage.
  • Expat Contribution – 10% weightage.
  • Further a 5% bonus weightage is allocated based on the revenue derived from outside the UAE, Emirati headcount, and Investment growth.
  • Finally, another 5% bonus weightage is awarded to manufacturers who participate in the Industrial Technology Transformation Index (ITTI).

SMEs and ICV

Small and Medium-sized businesses are expected to be the biggest focal points in the UAE government’s plan for promoting Emirati entrepreneurship. This is highlighted by the declaration of the Undersecretary of the Ministry of Economy that “…Small and medium-sized businesses are critical to building a knowledge-based economy in the UAE in line with the Principles of the 50 and UAE Centennial Plan 2071 targets”.

The price discounting incentive is therefore aimed at encouraging companies registered under The National Program for SMEs to join the ICV certification program in line with the objectives of the National Strategy to promote the economic growth and sustainable development of the economy. The move supports MOIAT’s efforts to create an attractive business environment for local and international investors as well as support the growth and competitiveness of national industries.

How to apply for ICV certification?

To join the ICV Program, entities need to follow a few simple steps:

  • Submit audited financial statements prepared using the International Financial Reporting Standards (IFRS).
  • Fill in the ICV template as per the guidelines.
  • Approach one of the authorized certifying bodies for evaluation.
  • Once the ICV certificate is received, the entity is eligible to submit it to one of the participating entities.

Who can Certify?

The Ministry of Industry and Advanced Technology has published the list of empanelled Certifying Bodies that are authorized to conduct a technical review on requests for In-Country Value (ICV) certification submitted by companies and to issue certificates pertaining to the Ministry’s requirements.

Key points to consider

  • The time needed to process the application would vary based on the company’s size, number of employees, and readiness to provide the required documents to the certification companies. On average the application processing might take one month.
  • The ICV certificate shall be valid for a period of 14 months from the date of issuance of Audited Financial Statements. The entity can get re-certified during the validity of the ICV certificate if they choose so, using the same audited financial statements; however, the validity of the certificate will continue to be 14 months from the date of issue of the original certificate.
  • ICV certification is optional for those seeking to participate in federal government tenders. The ICV score will be calculated as zero if the supplier does not provide an ICV certificate.

How ATB Legal helps with ICV certification

  • At ATB LEGAL, we offer comprehensive advice to our clients seeking ICV certification for SMEs.
  • Our services include legal and financial due diligence, ensuring compliance with the necessary requirements. We take a proactive approach, aiding in the drafting of essential documents and liaising with government authorities and certified bodies on behalf of our clients. You may check out our full suite of services.

To summarize

  • The reduction in the ICV certification fee marks a significant milestone in the UAE’s commitment to supporting the growth of SMEs.
  • By simplifying the certification process and making it financially accessible, the government is empowering SMEs to compete on a larger scale.
  • This initiative not only amplifies the contributions of SMEs to the national economy but also exemplifies the UAE’s dedication to fostering innovation, economic diversity, and sustainable development.
  • With SMEs at the forefront of this economic transformation, the future looks promising for both businesses and the nation as a whole.
  • ATB Legal stands ready to assist SMEs in navigating this transformative opportunity, contributing to their success and the overall economic prosperity of the UAE.

REFERENCES

About ATB Legal

ATB Legal is a full-service legal consultancy in the UAE providing services in dispute resolution (DIFC Courts, ADGM Courts, mainland litigation management and Arbitrations), corporate and commercial matters, IP, business set up and UAE taxation. We also have a personal law department providing advice on marriage, divorce and wills & estate planning for expats. Please feel free to reach out to us at office@atblegal.com for a non-obligatory initial consultation.

by Aparna T Nambissan

Aparna is a legal consultant at ATB legal. She holds a Bachelor’s degree in Law and Commerce from Karnataka State Law University. She is enrolled with the Bar Council of Karnataka.

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