ICV scores help companies take a competitive advantage in the market and enjoy the benefit of preferential treatment in government procurement processes. Hence, Companies tend to follow certain practices to improve ICV Scores over time. The In-Country Value is the total amount of revenue retained in the country for the purpose of stimulating business growth, developing human capital, and advancing productivity.
ICV Audit is becoming increasingly popular and demanding in the UAE to conduct ICV. In order to support the continued economic growth of the nation, an increasing number of companies are adopting methods to evaluate ICV and select the best suppliers. Bidding processes in the future could heavily rely on ICV calculations.
ICV score is a measurement of the economic contribution made by a company operating in the UAE. It is calculated by evaluating a company's spending on goods and services that originate in the UAE, as well as its investment in the country's workforce and local manufacturing capabilities. The higher the ICV score, the greater the contribution the company is making to the UAE economy.
ICV score is used as a benchmark to measure a company's economic contribution to the UAE and to support the country's economic development goals. Companies with higher ICV scores may also benefit from preferential treatment in government procurement processes, as well as a competitive advantage in the market.
To remain competitive during the tender process with companies that are considering ICV scores, you must obtain ICV certification as a supplier of goods and services in the UAE and constantly improve your ICV scores as well.
Calculation of ICV Score
The ICV score is calculated by evaluating a company's spending on goods and services that originate in the UAE, as well as its investment in the country's workforce and local manufacturing capabilities. The score is calculated as a percentage of the total spend that a company has made in the UAE, based on the following formula:
ICV Score = (Total Spend in UAE / Total Revenue) x 100
The exact formula for calculating the ICV score may vary slightly depending on the industry sector and size of the company as given below.
For Manufacturers within UAE
ICV Score = (Manufacturing costs incurred within the UAE + Emirati cost + 60% of Expat Cost) / (Total Cost)
For Suppliers within UAE
ICV Score = (Value of Purchase x ICV of the supplier + Emirati Costs + 60% of Expat cost) / (Total Cost)
For Investments within UAE
25% of the total assets the company owns. The ICV Value increases with the increase in the net book value asset.
ICV Score = Net book value of assets within the UAE / Net book value
ICV Certification and ICV Score
ICV certification is a formal recognition given to a company by the UAE government to acknowledge its commitment to supporting the local economy. To be eligible for ICV certification, a company must meet certain ICV targets, which are based on its size and industry sector.
A company's ICV score is calculated based on its compliance with these targets, and a high ICV score indicates that the company is making a significant economic contribution to the UAE. Once a company achieves the required ICV score, it can apply for ICV certification, which is awarded by a government-approved certification body
Importance of ICV Score for Government Tendering Process
In UAE, When submitting a bid for a government contract, companies are often required to provide their ICV score as part of the tendering process.
Additionally, some government tenders may have specific ICV requirements that companies must meet to be eligible to bid. For example, a tender may require that a certain percentage of the goods and services provided must originate from the UAE, or that a certain percentage of the workforce must be made up of UAE nationals. Companies that can meet these requirements and have a high ICV score may have a competitive advantage in the tendering process.
Note: Although participation in a tendering process is not mandatory, if you do not have an ICV certificate, you will have a 0% score on your ICV and this could hamper your chances of winning.
What is a Good ICV Score?
There is no specific threshold defined as a "good" ICV score in the UAE, a higher ICV score generally indicates a stronger commitment to local economic development and contribution. The ICV score requirements are typically outlined in tender documents, contract agreements, or specific guidelines provided by relevant government entities or contact authorities. Meeting that ICV Score requirement is sufficient to acquire such business deals.
Steps to Improve Your ICV Score
To determine a general ICV score, companies will consider the ICV certificate as well as your ‘ICV Improvement Plan’. As part of your improvement plan, you outline the steps you will be taking over a set period of time in order to increase your overall ICV score. Here are some tips on how to improve your ICV score,
- Local Sourcing: Use local suppliers for your goods and services. This includes sourcing raw materials, subcontracting, and any other goods and services required for your business operations. This demonstrates your commitment to supporting the local economy.
- Hiring UAE Nationals: Hire UAE Nationals for your workforce. This includes employing Emirati graduates, as well as supporting the development of local talent through training and mentoring programs. This demonstrates your commitment to developing the local workforce.
- Investment in the UAE: Invest in the local economy by building local manufacturing and service capabilities. This can be achieved through joint ventures, partnerships, and other investment initiatives that contribute to the local economy.
- Community Engagement: Participate in community programs and initiatives that promote local economic development. This includes sponsoring local events, supporting local charities, and participating in social and environmental initiatives.
- Technology Transfer: Transfer technology and expertise to the UAE. This includes sharing your knowledge and skills with local companies, universities, and research institutions, as well as collaborating with local businesses to develop new products and services.
How do ICV Auditors help achieve ICV Scores?
ICV Auditors play a crucial role in helping companies improve their ICV score in the UAE. They evaluate a company's ICV strategy, identify gaps, ensure compliance with regulations, monitor and report on performance over time, and provide training and development programs to build internal ICV capabilities.
ICV Auditors in UAE
At BMS Auditing, our ICV Auditors can give companies valuable guidance, insights, and support to improve their ICV score through the ICV Certification Services in UAE and help them demonstrate their commitment to the UAE economy, and align with the country's economic development goals.
By working closely with you to optimize your Emiratization agenda, BMS Auditing, the top audit firm in Dubai, can help improve your ICV score and your ICV improvement plan. With experience working directly with the UAE's largest employers of nationals, we work with some of the best local talents on the market.
As part of the UAE In-Country Value (ICV) program, BMS conducts regular seminars and webinars with Professional Groups and stressed the importance of the ICV program to the UAE in expanding business opportunities for entities based in the country and generating employment opportunities for UAE nationals.