It is common in the UAE for one owner to hold several companies: a mainland trading company, a free zone company for exports, a holding company, a property company and an overseas subsidiary. Each is a separate legal entity with its own licence, bank accounts and tax position. Yet the owner wants one picture of how the group is doing. Spreadsheets break down quickly here. This guide explains how multi-company accounting should work, and what to require from your ERP. It is general information; structure and tax decisions belong with your advisers.
Separate entities, shared system
A multi-company ERP keeps each legal entity's books apart while sharing customers, suppliers, items and users where that makes sense. For each company you need:
- Its own chart of accounts, or a shared one with company-level balances.
- Its own document numbering, tax registration number and tax settings.
- Its own bank accounts, financial year and period locks.
- Its own printed documents with the correct legal name, address and licence details.
See also software for free zone companies in Dubai and mainland, free zone and offshore structures.
Intercompany transactions
When one group company sells to, lends to or shares costs with another, both sides must record it and the balances must agree. Typical examples:
| Transaction | Company A books | Company B books |
|---|---|---|
| A sells goods to B | Sales and receivable from B | Purchase and payable to A |
| A pays a shared cost for B | Receivable from B and a credit to expense | Expense and payable to A |
| A lends money to B | Loan receivable and bank outflow | Loan payable and bank inflow |
| A transfers stock to B | Stock out and receivable | Stock in and payable |
Good ERPs create the matching entry in the other company automatically, so the two sides are always equal. If you use separate files or packages, someone has to reconcile intercompany balances every month. See the month-end close checklist.
Consolidation in four steps
- Align the accounts: map each company's accounts to a group chart so the same kind of cost or income lands in the same line.
- Translate currencies: translate overseas subsidiaries into dirhams using the right rates (closing rate for balance sheet items, average for income and expenses, historic for equity), and record the translation difference.
- Eliminate intercompany balances and profits: remove intercompany sales and purchases, receivables and payables, and any profit in stock still held within the group.
- Add up and present: produce group profit and loss, balance sheet and cash flow, with a view by company and by business line.
Where the group does not need statutory consolidated statements, a management consolidation with simple eliminations is often enough for decision making.
Tax points to raise with your adviser
- Whether companies can be treated together for VAT or corporate tax purposes under the available grouping options.
- Transfer pricing rules for transactions between related parties, and the records they require.
- Treatment of free zone companies, and which of their income qualifies for special treatment.
- Withholding or other taxes on cross-border payments.
Your ERP can hold the data and flag related-party transactions, but the decisions are for qualified advisers. See the corporate tax checklist and the VAT return routine.
Access control for groups
- Users see only the companies they work in; the group finance team sees all.
- Approval limits can differ by company.
- Intercompany postings need an approver in each entity.
- An audit trail records who posted what in which company. See role-based access and audit trails.
What to require from an ERP supplier
- Unlimited legal entities in one installation, with data separation.
- Automatic mirrored intercompany entries and an intercompany reconciliation report.
- Multi-currency with revaluation and translation.
- Group reporting with drill-down to each company.
- Per-company document templates and numbering.
- Roles by company, and a complete audit trail.
We configure these for groups across the emirates. See ERP software in Dubai, the complete ERP guide and ERP data migration for planning a move from spreadsheets or separate packages.