The Impact of ICV on Joint Ventures between UAE Nationals and Foreign Investors
Looking to grow in the UAE? A joint venture might be your smartest play. The UAE is bold, modern, and business-ready. It’s a hotspot for innovation, tech, and global trade. That makes it the perfect place to team up and go big.
A joint venture (JV) is a perfect way of entering the vibrant market of the UAE. It is a commercial deal between two or more partners. You share resources, risks, and rewards as you chase the same goals.
Here’s why JVs are a win:
- Faster market entry — skip the long setup hassle
- Lower costs — no need for full-scale operations
- Stay in control — keep ownership of your investment and returns
- Tax perks — benefit from local incentives and customs breaks
JVs are perfect for businesses that look for flexibility, speed, and access. But they need to be structured right. A rushed setup can cost you. This blog breaks down the real opportunities and hidden risks of joint ventures in the UAE. But before we dive in, let’s quickly look at how JVs actually work here.
Understanding Joint Ventures in the UAE
We have discussed what joint ventures are. Definitions aren‘t Before you dive into a joint venture, you’ll need to choose the right setup. In the UAE, that means picking between two main options: Mainland or Free Zone.
Mainland License
This is your go-anywhere ticket. A Mainland company is licensed by the UAE’s Department of Economic Development (DED). That means you can operate across the entire UAE, no zone restrictions. The government is pushing hard to attract foreign investment here. That means:
- Faster licensing
- Flexible operations
- Access to public-sector contracts
If you’re planning a joint venture with local market reach, the mainland setup gives you the freedom to grow. Government is supporting businesses and that means sufficient governmental support at every stage of the setup.
Free Zones
Want full control and tax relaxation? Free zones are your friend. With a Free Zone license, you get:
- 100% foreign ownership
- Zero customs duties within the zone
- Top-tier infrastructure
- Proximity to ports, airports, and trade hubs
But there’s a catch: you’re limited to operating inside the zone, unless you get special permits or a mainland agent. This works best for export-focused ventures or tech-based setups targeting global markets.
How Do Joint Ventures Work in the UAE?
Joint ventures in the UAE are built on collaboration. A local Emirati partner teams up with a foreign investor. Each brings something to the table, capital, know-how, networks, or market access. You don’t need a full-fledged company. You just need the right partner and a clear agreement.
There are two main JV models:
- Equity-based — where both parties own shares and profits
- Contractual — where partners work together on a project without forming a new legal entity
The structure depends on your goals. Some JVs aim for long-term market growth. Others focus on a single big project.
One big plus? UAE law now allows 100% foreign ownership in many sectors. But in strategic areas like oil & gas or defense, you still need a local partner. The government has control over its natural resources. Oil and gas sectors are not open zones for 100 percent investment. That’s where JVs shine.
Done right, a JV gives you speed, access, and scale.
Why ICV Matters More Than Ever
Now here’s the game-changer: ICV, In-Country Value. ICV is a national program that measures how much of your business benefits the UAE economy. It’s a big deal. Want to win government contracts or work with giants like ADNOC? You’ll need a strong ICV score.
The ICV formula looks at:
- Spending inside the UAE
- Local manufacturing and investment
- Emirati hiring and training
- Use of local suppliers and services
- Bonuses for exports and innovation
From January 1, 2025, things get stricter. All JVs must submit audited, stand-alone financial statements. No more shared or consolidated reports. It’s all about transparency. In a joint venture, your ICV score matters. It can open doors or close them. Choose the right partner, plan your structure well, and you’ll be ready to compete.
Related Article: Why Abu Dhabi Mainland Is the Top Choice for Entrepreneurs in 2025
What is ICV Certificate?
ICV meaning In‑Country Value. It’s a UAE government initiative—originally launched by ADNOC in Abu Dhabi in 2018 and now managed by MOIAT nationally to quantify and encourage a company’s contribution to the local economy.
The certification measures:
- Local manufacturing or procurement
- Investment in UAE assets
- Hiring and training of Emiratis
- Expatriate workforce contribution
- Performance bonuses (e.g. exports, Emirati headcount growth, investment growth)
An ICV Certificate in UAE is issued annually by a certifying body (e.g., Deloitte, Crowe, Grant Thornton), validating a company’s ICV score based on submitted financials
Common JV Structures in the UAE
Foreign investors team up with UAE nationals using one of two popular models:
Corporate Joint Venture (LLC)
You form a new company, usually an onshore LLC. Profits, losses, shares – all under one roof. It is a flexible management structure with limited liability protection for the parties to the partnerships. Offshore options in ADGM or DIFC (financial free zones) are also smart picks, offering English-law frameworks and solid governance.
Contractual Joint Venture
No new company. This means you need no separate legal entity. You sign a contract, pool resources, and share output. This structure is simple, project-focused, and flexible. It works great for specific ventures.
Ownership Rules:
- Onshore LLCs usually require a local partner with a 51% stake—unless your sector now allows 100% foreign ownership.
- Free zone firms offer full foreign ownership but limit you to zone operations unless you add extra licensing.
Choosing the right model comes down to your goals: local reach? Go onshore. Want full ownership and global scope? Free zone JVs in ADGM/DIFC could be your sweet spot .
Legal & Tax Requirements for UAE JVs
Legal and tax requirements in the UAE can be a bit complicated. Here, we simplify the rules for easy understanding:
Licensing & Local Rules
- Onshore LLCs: Register with the DED. Comply with Commercial Companies Law. Local partner still needed in many sectors.
- Free zone entities: License from the relevant authority. Perfect for export-ready and tech-savvy ventures.
Contracts & Governance
- A solid JV agreement is a must. Cover ownership, profits, dispute mechanisms, exit clauses.
- Free zones like ADGM & DIFC support advanced corporate tools, drag‑along, tag‑along, arbitration
Corporate Tax under Decree‑Law 47/2022
- Tax kicks in from June 2023: 0–9% based on profit thresholds.
- Unincorporated JVs (contractual models) now can opt-in to entity-level taxation, simplifying compliance.
- Free zone companies may enjoy 0% tax, if they meet substance requirements and tick Qualifying Income boxes.
New 15% Minimum Tax for MNEs
- From January 1, 2025, large multinationals (global revenues > €750 million) face a 15% top-up tax under OECD rules.
- SMEs and most free zone JVs are exempt—so long as profit stays under thresholds or inside the zone
Why It Matters
Setting up a JV isn’t just a handshake and a spreadsheet. It’s a legal and fiscal blueprint. You will have to choose your structure. Nail your agreements. Meet tax rules. Align with the new global minimum tax.
That’s the backbone. Up next? We’ll dive into the huge upsides strategic, operational, and economic that a well-designed JV brings in the UAE.
Related Article: Abu Dhabi’s Financial Centre Poised for Accelerated Growth in 2025
How ICV Certification Affects Joint Ventures
In today’s UAE business environment, ICV isn’t optional, it’s essential. For joint ventures, it can make or break your ability to compete, especially in high-value sectors.
The Weighted ICV Formula
ICV scores in a JV are calculated using a weighted average. That means each partner’s ICV certificate is factored in based on their equity stake.
Example:
- UAE partner has 60% ownership and an ICV score of 48
- Foreign partner holds 40% and scores 25
- The JV’s total ICV score = (60% × 48) + (40% × 25) = 39.6
Your score is only as strong as your weakest link.
Audited Financials Are a Must
Every partner in the JV must have:
- A valid ICV certificate, issued by an accredited certifier
- Audited, stand-alone financial statements—no consolidated accounts allowed from Jan 2025 onward
If one partner fails to comply, the JV can’t get certified. That blocks you from bidding on many public and semi-government contracts.
JV-Specific ICV Plans Are Now Required
JVs also need to submit:
- A custom ICV improvement plan
- Detailed commitments to increase local spending, Emirati hiring, and other ICV inputs over time
This is a core requirement in tender evaluations by ADNOC and other government entities.
No ICV, No Contract
Government and ADNOC tenders are increasingly tied to ICV performance. A low or missing ICV score can disqualify your bid, no matter how competitive your offer is otherwise.
Strategic Benefits of ICV Certification for JVs
Getting ICV right isn’t just about compliance, it’s a business advantage. Win More Contracts
A high ICV score gives your JV a clear edge in:
- Government projects
- ADNOC procurements
- Semi-government tenders
It’s often a scoring criterion, not just a checkbox.
Build Credibility
Certified JVs are seen as serious, committed players. They earn trust from:
- Government stakeholders
- Banks and lenders
- Local suppliers and regulators
Access Incentives
Some free zones and ministries offer:
- Preferential procurement terms
- Financing support
- Faster approval processes- exclusively for ICV-certified businesses.
Align with National Goals
JVs that support Emiratization, local manufacturing, and economic diversification are more likely to:
- Attract support
- Retain licenses
- Receive long-term partnership offers
Ensure Sustainable Growth
ICV compliance pushes your JV to invest locally, skills, jobs, assets. That strengthens your position and future-proofs your business in the UAE.
Challenges in Setting Up a Joint Venture in the UAE
Joint ventures in the UAE are no doubt very feasible. There are so many incentives that businesses can use. That does not mean there are no difficulties at all. They come with their share of challenges. Knowing them upfront can save you headaches later.
Legal and Regulatory Hurdles
The UAE’s laws can be tricky.
- Foreigners often need a local partner owning 51%.
- This limits your control.
- Some sectors allow 100% foreign ownership, but not all.
Drafting the JV agreement is critical. You must cover ownership, roles, exits, and more. Cultural and legal differences, influenced by Sharia law and customs, can cause misunderstandings. One wrong move here can lead to disputes.
Finding the Right Partner
Your local partner can make or break the JV.
- It could be a person or a UAE-owned company.
- They must know local laws and have a solid reputation.
- Alignment on vision and goals is key.
Don’t settle for a silent investor. You want a partner who adds value, market know-how, connections, and shared ambition. This is especially important if the Emirati partner holds majority shares.
Bridging Cultural and Operational Gaps
Business culture in the UAE is unique.
- It values long-term relationships over quick deals.
- Decision-making can be slower. Patience is a must.
- Labour laws, management, and hierarchies differ from the West.
- Differences can cause clashes in daily operations and contract enforcement.
Foreign companies need to respect and adapt to these cultural nuances to avoid friction.
How ADEPTS Supports JVs in Navigating ICV Certification
ADEPTS offers icv certification services and knows ICV inside out, especially for joint ventures and complex partnerships. They offer expert consulting to help your JV meet and exceed ICV requirements. Their services include:
- Corporate Tax Registration
- They assist JVs with registering for UAE corporate tax under the new Federal Decree-Law No. 47 of 2022—ensuring all entities are compliant from day one.
- Financial Audit Preparation
- ADEPTS helps prepare stand-alone, IFRS-compliant audited financial statements, a requirement for ICV certification process from January 1, 2025.
- ICV Score Optimization
- They review every ICV certificate cost component—local procurement, Emiratization, capex, and bonuses to maximize the JV’s weighted average ICV score.
- JV-Specific ICV Strategy
- They build tailored plans based on equity structure and sector focus. This includes forecasting, performance tracking, and improvement plans to stay competitive in tenders.
ADEPTS has a strong track record. They’ve helped multiple UAE-based JVs boost ICV scores, win government and ADNOC contracts, and improve local content commitments. They stay sharp on the latest regulations and technology. That means your JV always gets advice that’s up-to-date and effective.
Practical Steps for JVs to Achieve and Maximize ICV Certification
Here’s a clear roadmap to help joint ventures succeed with ICV certification:
Step 1: Entity Setup & Audit-Ready Financials
Register your JV with NAFIS and get each partner’s legal entity in order. Prepare stand-alone audited financial statements for each entity involved. No consolidated reports are allowed.
Step 2: Collect Core Data
Gather detailed data across all partners:
- Investment in UAE assets
- Local procurement and manufacturing costs
- Emirati salaries and training expenses
- Expat salaries (only partially counted)
This is the backbone of your ICV calculation.
Step 3: Develop a JV-Specific ICV Plan
Build an improvement plan that reflects each partner’s equity. Set clear targets for increasing local spend, hiring nationals, and boosting your UAE-based operations. This plan may be mandatory for certain tenders (especially ADNOC).
Step 4: Submit to a Certified ICV Auditor
Choose from authorized ICV certifying bodies (like Deloitte, Crowe, or BDO). Submit your ICV template, supporting documents, and audit reports. Expect a detailed review and possibly a site visit.
Step 5: Leverage Your ICV Certification
Use your ICV score as a strategic tool in proposals. Highlight it in bids for:
- Government contracts
- ADNOC supplier approvals
- Public-private partnerships
A high ICV score boosts your ranking, improves your credibility, and opens more doors.
Future Outlook: ICV and Joint Ventures in the UAE
The UAE’s ICV program is evolving—and fast. What started in energy and procurement is now expanding into new high-growth sectors.
Expect to see ICV frameworks rolled out in:
- Fintech and digital services
- Healthcare and medical tech
- Advanced manufacturing and AI-driven industries
This is no longer just about local spending. The UAE is linking ICV scoring to:
- R&D investments
- Technology transfer
- Green initiatives and sustainability
For joint ventures, this means new opportunities, but also new expectations.
You’ll need to:
- Track more data points
- Align with UAE Vision 2031 goals
- Invest in innovation and Emirati workforce development
JVs that proactively adapt will gain a serious edge, especially in ADNOC bids, government contracts, and strategic partnerships.
Digital tools and AI will play a big role too. From ICV calculation platforms to auto-updated reporting dashboards, technology will help JVs simplify compliance, reduce errors, and spot performance gaps early.
Forward-looking JVs should start:
- Digitizing ICV data management
- Revisiting improvement plans annually
- Upgrading financial reporting standards
In short: ICV is growing in scope and depth. JVs that prepare today will lead tomorrow.
Conclusion
ICV is no longer a formality, it’s a strategic pillar in the UAE’s economic vision. For joint ventures, understanding and maximizing ICV has become essential to long-term success.
From structuring your JV right to aligning with local laws, ICV affects everything: licensing, compliance, partner roles, bid eligibility, and growth potential. Proactive JVs are already building internal systems to manage ICV scores, improving their supply chains, and developing Emirati talent. The result? More contracts, more trust, and stronger partnerships.
But navigating ICV isn’t easy, especially in multi-partner setups. That’s where ADEPTS comes in.
With deep expertise in ICV audits, score optimization, and JV strategy, ADEPTS helps you stay compliant, competitive, and contract-ready. Don’t wait for ICV to become a hurdle. Make it your advantage. Partner with ADEPTS. Maximize your ICV. Power your joint venture forward.
FAQs:
No. The JV itself must be certified. Each partner’s ICV score contributes, but a valid JV-level certificate is required to qualify for tenders.
ICV doesn’t dictate profit shares. Distribution is governed by the JV agreement. However, a stronger ICV score can increase total contract wins—affecting the bottom line.
There are no direct fines, but the real cost is disqualification from tenders, especially from ADNOC and public sector buyers.
Yes. A strong ICV score signals local impact and regulatory alignment—two major factors that attract serious investors.
Every 14 months from the date of audited financial statements. Annual re-certification is strongly advised for consistent eligibility.
Platforms like Tawteen, MOIAT’s ICV Portal, and enterprise tools with ICV modules (e.g., SAP, Oracle) can automate data tracking and streamline reporting.
Any ownership change affects the weighted ICV score. A new partner with a lower ICV score could weaken the JV’s eligibility. Exit clauses should account for ICV impacts.
