ICV program in the UAE is developed to encourage businesses to source more and spend more of its procurement budget within the country. Nevertheless, ICV requirements and calculation methods are shifting over time to meet higher levels of localization. This article explains how firms can develop and implement strategies for anticipating and managing changes to the ICV framework in the UAE. 

Understanding the evolving ICV Certificate UAE Requirements in UAE

Some of the major changes in the requirements of ICV certificate UAE for the past few years include the following:  

• Increased scope of implementation: This program was first formulated for government organizations, but now is applicable to public and private organizations.
• Higher weighting for local manufacturing: The weightage of domestic manufacturing costs has been progressively increased in the ICV score determination process.
• Bonuses for exports and new categories: Extra credit is now given for attributes such as export, employment of more Emirati,s and increase in investment in the UAE etc.
• Stricter localization targets: The threshold of ICV score that the firms have to meet to access the government tenders has been gradually raised over time, thereby increasing the pressure on firms to embrace greater levels of ‘local content’.
• Alignment with the ‘Make it in the Emirates’ strategy: The changes further aligned the ICV framework to the new UAE government agenda of supporting domestic manufacturing and import substitution measures.

Optimizing procurement and supply chain for ICV Certificate in UAE

There is a lot of potential to enhance the ICV score in the context of the supply chain. It is recommended that organizations transform the traditional methods of evaluating vendors on price and quality and undertake the following: 

• Local sourcing potential: It is necessary to examine all potential purchases of both goods and services that can be obtained in the UAE in terms of quality, price, and availability.
• ICV score of current suppliers: Compare all the ICV scores of the major suppliers with those of the company and source from suppliers with the highest localization scores.
• Scope for local value addition: Introduce the idea that despite the fact that some raw materials, components or finished products are imported at the moment it is possible to search for ways to produce them locally in partnership with some companies.
• Warehouse and distribution models: There is a need to plan for warehousing, assembly, and distribution strategies that afford regional exports precedence over direct imports.

Strengthening operational ICV attributes

Employment generation, local production, and investments are also among the key focus areas of ICV initiatives. Businesses must actively work to build up these attributes as follows:

Table: ICV Calculation Attributes

Attribute	Description	Weightage (%)
Goods Manufacture Cost	Cost of manufacturing goods within the UAE	50%
Third Party Spend Cost	Expenditure on third-party services within the UAE	50%
Investment in UAE	Local investments by the supplier	25%
Emiratization	Employment of Emirati nationals	15%
Expatriate Contribution	Contribution of expatriate workforce	10%
Bonus	Additional points for specific achievements	5%

Maintaining ICV certificate UAE

It is mandatory for businesses to get their ICV certificate renewed periodically as per MoIAT guidelines given below: 

• Validity: Audited financial statements can be issued only once within a 14 months period starting from the date when the certificate was issued.
• Timeline for renewal: Renewal application should be made before the current license expires by at least two months to prevent court cases.
• Financial documents: It is required that the latest audited financials submitted should not be more than 2 years at the time of applying.
• Calculate ICV score accurately: Complete it properly, ensuring all the figures are linked with the audited statements to stand the scrutiny.
• Engage certified ICV bodies: One should only seek assessment from agencies recognized by MoIAT for certification to guarantee acceptance.
• Address compliance issues proactively: Ensure you respond to the assessment immediately in order to rectify what has been marked as wrong.
• Monitor policy changes: Ensure that the certificate is renewed to abide to any new validity regulations set.

It’s important to have valid ICV certification to be eligible for government contracts and access new business. 

FAQs

1. How frequently can a business renew its ICV certificate?

Subsequently, a business can renew ICV certificate within the period of 14 months by using the same audited financials. However, a new certificate will be awarded a new validity after the renewal of the application is approved. 

1. Can an ICV score be improved upon renewal?

Yes, a business can take certain actions over the year such as increasing its local sourcing, establishing a new manufacturing unit, increasing its employment of Emiratis, and etc., which can lower the ICV score when the next renewal is done using the most updated financial information. 

1. Can we claim ICV benefits for activities outside the UAE?

ICV score calculation as well as benefits are only applicable to the economic activity and expenditure that occur within the geographical location of the UAE. The expenses and activities on the international level are excluded.

Conclusion

Conclusively, ICV certification in the UAE is committed to focus on continual development with an intention to incrementally raise the domestic value addition. Local companies need to actively manage change, selectively manage and improve operations, and maintain valid ICV certification to remain eligible for the benefits of the program and unlock local business opportunities. Therefore, companies should consider seeking ICV certification services from professional ICV Consultants in UAE, to seamlessly obtain ICV certification and ensure compliance with statutory regulations. Thus, contact us today and we shall be glad to assist you. 

Read More: ICV requirements in UAE: Tips for Small and Medium Sized Enterprises