ICV certification services in UAE
Abu Dhabi National Oil Company (ADNOC) introduced a program called the ICV program (In-country value), which has been in effect from the 1st of April 2018. The requirement of the program is that all UAE based goods suppliers acquire an ICV (In-country value) certification from the ADNOC ICV certification agency. Along with this, the suppliers are required to get the calculated ICV score demonstrating their contribution to the previous financial year to deliver the ICV. Suppliers who are not interested in procuring the ICV certification will be able to take part in the ADNOC group tender, though their ICV score will be considered to be zero.
What is the ICV certification program
To encourage the private sector partnership in the economy built of the United Arab Emirates, the ICV program was launched by the ADNOC in January 2018, effective from the 1st of April 2018. This program targets at creating opportunities and a favourable environment for the local good suppliers’ ad sub-suppliers who are involved in trade in the UAE in a very direct process or act as an intermediate contributor. This program is a part of the ADNOC’s 2030 growth strategy which aims at building socio-economic space for the local nationals and catalyze the development and transfer of knowledge among the locals. ADNOC believes that the local traders play a great role in the GDP growth and for deriving the economic diversification and thus are reactive to provide support and value to the local national so that their contribution to the economy can be enhanced.
Why is ICV certification important?
ADNOC launched the ICV program so that the local nationals can participate in the favourable exchange of socio-economic trade and thus can potentialize their abilities to promote growth in trade. The main focus of the program is to harness the value of oil and gas reserves so that the local traders are able to support the diversification in the economy of the United Arab Emirates. This is a good opportunity for the local traders to expand their network and socialize with the reforms set for their welfare. The ICV certificate needs to be attained in order to participate in the tender of the ADNOC or any of its group entities.
Who needs to have a unified ICV certificate?
Firms or companies that are directly or indirectly working as suppliers or sub-suppliers to the government and semi-government like ADNOC Group committees, Abu Dhabi Department of Economic Development and Aldar properties. Trading companies working as intermediate suppliers for the Abu Dhabi ports, Environment Agency Abu Dhabi and all other government departments of the United Arab Emirates are required to have the ICV (In-Country Value) certificate.
The ICV Certification
IFRS based Audited financial statements
The audited financial statements form the entire basis of the In-Country Value certification. The financial statements which have been audited must conform to the latest international financial reporting standards (IFRS). For ICV certification, these statements must not be older than two years. For example, to apply for an ICV certification in 2020, the audited statements must be for the year 2018 or later.
In-Country certification for group companies
There are companies with several branches in the same city or state performing the same activity. The licenses to the branches are allotted so as to declare them independent business entities. To overcome this ambiguity, only one combined ICV certificate is allotted to the company in that particular Emirate.
Newly established companies and management accounts for them
For younger or newly established companies or firms that are less than ten months old and do not have the audited financial statements, management accounts are provided to them in this case for a period of up to 9 months for the sake of ICV calculation. Other management accounts which are older than nine months need to get audited mandatorily.
Validity of Unified ICV certification
The validity of an ICV certificate is up to a period of 14 months, applicable from the date of issue of the audited financial statements. The certification can be recertified if the owner of the company wishes to do so, but the period validity that is 14 months will remain the same.
How is the ICV certificate issued?
Information regarding the performance of the company for the previous financial year is to be submitted by the suppliers under the ADNOC’s ICV program. To ensure that the information submitted by the suppliers is true and authentic, a panel of independent certification bodies, established by ADNOC is appointed. PwC is one such body appointed by the ADNOC as independent certifiers to verify the information submitted by the suppliers for the calculation of their ICV score.
How are the ICV scores calculated?
The ICV scores are calculated according to a pre-defined methodology set by the ADNOC. The economic value adds within the United Arab Emirates for the goods or services offered by the company are assessed in order to calculate the ICV scores. Areas like services offered, goods manufacture, exports. Investments are taken into consideration to calculate the ICV score.
Crux behind the ICV certification
The aim is to uplift the wills and interest of the local nationals to contribute their bit in the upliftment in the economic scenario in the Emirates. The value obtained for oils and gas reserves is used in the development of the local nationals and thus for the localization of the capabilities for some critical supplies in the intermediate or main functions in the key industry. As this initiative is focused at deriving optimal value from oil and gas reserves the contribution of the local chain supplies will surely help in the achievement of the required goal which is focussed towards the encouragement of the private sector services and trade.
General information for the suppliers
The program of ICV certification accommodates all suppliers in the United Arab Emirates. Goods manufactured in the UAE, Export of goods and services from the UAE, Third-Party spends (Procurement of goods and sub-contractors), Local investment and Emiratization of the local workforce is examined to assess, the capabilities of the business of the suppliers.
ADNOC has prescribed a supplier submission template that must be filled according to the latest financial audit statements. This is where Aviaan Accounting comes to your assistance. Template submission guidelines can be explained to you. Aviaan accounting helps you to know the factors that determine your company’s ICV score and how can the ICV score be increased. Drafting the ICV template based on upon the records of the financial year can be improved so that when it is presented to the ICV auditor, the requires ICV score can be achieved as expected.
Aviaan accounting can help in
- Improvising the ICV plans that are required to be submitted with the Tender of the ADNOC, department of economic development and Aldar properties.
- Avoiding the seizure of ICV milestone payments by demonstrating and explaining the working criteria for the improvement of the ICV plan.
- Making you understand the factors that will help improve your ICV scores.
- Avoiding and eliminating any such factors that help in demoting your ICV scores.
For any information and queries that you have regarding ICV Certification in UAE, get in touch with us. With a rich body of experience, our experts can certainly help you with the requirements. Contact us now.
n be achieved as expected.