In the United Arab Emirates (UAE), the term “In-Country Value” (ICV) refers to a program implemented by the government to encourage the participation of local businesses and industries in the country’s economy. The ICV program aims to enhance economic diversification, job creation, and knowledge transfer by promoting the development of local capabilities and fostering partnerships between local and international companies.
The ICV program requires companies operating in certain sectors, such as oil and gas, energy, construction, and manufacturing, to meet specific localization targets in their operations. These targets are measured through an ICV score, which represents the percentage of a company’s spending that contributes to the local economy.
The ICV score is calculated based on several factors, including the following:
- Emiratization: The extent to which a company employs Emirati nationals in its workforce. Hiring Emirati employees is highly encouraged to support the development of local talent and create job opportunities for UAE citizens.
- Local Procurement: The amount of goods and services a company procures from local suppliers. Encouraging companies to source materials, products, and services from local vendors helps stimulate local businesses and industries.
- Investment in UAE-based Companies: The level of investment a company makes in UAE-based businesses, startups, and research and development activities. This factor promotes knowledge transfer, innovation, and the growth of local industries.
- Contribution to the GDP: The financial contribution of a company’s operations to the UAE’s Gross Domestic Product (GDP). This factor assesses the overall impact of the company’s activities on the country’s economy.
The specific ICV targets and scoring mechanisms may vary across different sectors and industries. The UAE government, through various regulatory bodies, sets the guidelines and monitors compliance with the ICV program.
Companies operating in the UAE are required to submit regular ICV reports, which provide detailed information on their activities and spending patterns. These reports are evaluated to determine the company’s ICV score, and compliance with the ICV program is often a prerequisite for participating in government tenders and contracts.
It’s important to note that the specific details and requirements of the ICV program may evolve over time. Therefore, it is advisable to refer to the latest guidelines and regulations provided by the UAE government or relevant authorities for the most accurate and up-to-date information on ICV scoring in the UAE.
What does ICV Audit concludes?
The ICV program, as mentioned earlier, aims to promote local economic participation, job creation, and knowledge transfer. Companies operating in sectors covered by the ICV program are required to meet certain localization targets and demonstrate their contribution to the local economy. An ICV audit would involve evaluating a company’s adherence to these requirements and assessing their ICV score.
The specific objectives of an ICV audit may include:
- Compliance Assessment: The audit would assess whether the company is meeting the ICV program’s guidelines and regulations set by the government or relevant authorities. This would involve verifying the company’s efforts in Emiratization, local procurement, investments in UAE-based businesses, and overall contribution to the country’s GDP.
- Documentation Review: The auditor would review the company’s ICV reports and supporting documentation to ensure accuracy and completeness. This includes examining records related to Emirati employee hiring, local procurement contracts, investments in local companies, and financial statements demonstrating the company’s contribution to the UAE’s GDP.
- Verification of Data: The auditor would verify the data provided by the company through various means, such as conducting interviews, site visits, and cross-referencing with external sources. This helps ensure the reliability and authenticity of the information provided.
- Assessment of ICV Score: The auditor would calculate the company’s ICV score based on the prescribed methodology and criteria. This involves quantifying the company’s compliance with the ICV targets and determining the percentage of its spending that contributes to the local economy.
Following the ICV audit, a report would be generated, detailing the findings, compliance status, and the ICV score achieved by the company. This information is crucial for companies participating in government tenders and contracts, as it demonstrates their commitment to supporting local economic development and may influence their eligibility or competitiveness in the procurement process.