--- title: "Multi-entity accounting: running companies in two countries in one system" description: "Multi entity accounting for a group with companies in two countries: separate books, two VAT regimes, AED and SAR, consolidation and intercompany." url: https://1flux.ai/blog/uae-and-saudi-companies-in-one-system last_updated: 2026-10-11 --- Finance and accounting # Multi-entity accounting: running companies in two countries in one system Two currencies, two tax regimes, two sets of registrations and one group view. What to set up, and what to watch, with a UAE company and its Saudi subsidiary as the example. Finance and accounting 7 min read Rules last checked 7 October 2026 1. Legal entities - AE · AED Sadaf Building Supplies LLC - SA · SAR Sadaf Trading Company - Holding Consolidation into AED 2. One workspace - Sadaf Group workspace One login, entity-level access Separate legal entities, each with its own currency and books, on one workspace, consolidated into a group currency. ## In short Multi-entity accounting means keeping a separate set of books for each legal company, in one system, and combining them into a group view when you need it. A group with a UAE company and a Saudi subsidiary, for example, has to keep AED and SAR books apart, apply 5% and 15% VAT, print different registrations on documents and still give the owner one set of numbers. The hard parts are consolidation across currencies and trade between your own companies, so plan both from day one. ## What is multi-entity accounting? Multi-entity accounting is running the books of several [legal entities](https://1flux.ai/glossary/legal-entity) in one system. Each entity keeps its own ledger, currency, tax registrations and accounting periods, because each one files its own returns. The system shares what can safely be shared, such as the chart of accounts structure, customers and items, and combines the ledgers through [financial consolidation](https://1flux.ai/glossary/financial-consolidation) when management or the bank asks for group figures. It’s different from running branches. A branch shares its company’s books; a Saudi subsidiary of a UAE company is a separate legal person with its own commercial registration, VAT number and statutory accounts. The [multi-entity](https://1flux.ai/glossary/multi-entity) approach respects that separation without two unconnected systems. ## Why is a two-country group harder than two separate companies? Each company follows its own country’s rules, and the group view has to bridge them. For a UAE company and a Saudi subsidiary, these differences affect daily accounting most. | | UAE company | Saudi company | | ------------------------------ | ----------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | | Functional currency | UAE dirham (AED) | Saudi riyal (SAR) | | Standard VAT rate | 5% | 15% | | Key registrations on documents | VAT TRN, trade licence, corporate tax TRN | Commercial registration (CR), VAT number, unified number | | Address format | Emirate, area, PO box | Saudi national address (building number, street, district, postal code, additional number) | | Invoice language | English is accepted; the tax authority can ask for an Arabic translation | Tax invoice details must be in Arabic, with other languages allowed alongside | | E-invoicing | Mandatory in phases from 1 January 2027, through Accredited Service Providers | ZATCA e-invoicing; Phase 2 integration rolling out in waves, the latest due by 1 February 2027 | | Direct tax | UAE corporate tax | Zakat and income tax, depending on ownership | Rules as published by each authority, last checked on 7 October 2026. Confirm them with your tax adviser before relying on them. None of this is unusual on its own. The work is doing all of it every month without mixing the two companies up. ## Separate systems or one multi-entity system? You can run each company in its own system, or both in one system with separate books. Both work; they suit different groups. | | Separate systems | One multi-entity system | | ------------------------------------ | ---------------------------------------------- | -------------------------------------------------------------- | | Setup | Each company configured on its own | One setup, with country-specific settings per entity | | Customers, suppliers and items | Maintained twice, often with different codes | Shared where sensible, so codes match across the group | | Group figures | Exported from both, combined in a spreadsheet | Combined in one consolidation run | | Exchange rates | Entered and applied by hand in the spreadsheet | One rate table, applied consistently | | Access | Separate logins; hard to see across companies | One login, limited to the entities each person works in | | Risk of posting to the wrong company | Low, because the systems are separate | Real, unless the system always shows which entity you’re in | | Best for | Unrelated businesses under one owner | Companies that share customers, suppliers, stock or management | If your companies share products, customers or suppliers, or one buys from the other, one system usually saves more than it costs. ## What should “one system” mean in practice? A multi-entity system should keep entities separate by default and combine them only on purpose. Check for each of these: - **Separate books per entity:** own journals, periods and opening balances, on a shared chart of accounts structure. - **Per-entity settings:** [functional currency](https://1flux.ai/glossary/functional-currency), time zone, fiscal year, tax codes, document numbering and costing method. - **Per-entity identity on documents:** legal name (including Arabic, where needed), registrations, address, letterhead, bank details and signatory. - **Warehouses that belong to an entity,** so stock is valued in the right company’s currency. - **A visible entity indicator** on every screen, and **access by entity,** so a Riyadh accountant works in the Saudi books without seeing the UAE ones. - **Consolidation into a group currency,** with the translation method shown, not hidden. - **A clear intercompany method** for trade and loans between your own companies. ## How does consolidation work across AED and SAR? Consolidation translates each entity’s ledger into one group currency, then adds them up. The common method, used in IFRS-style reporting, works like this: 1. **Income and expenses** are translated at the period’s average exchange rate. 2. **Assets and liabilities** are translated at the closing rate on the last day of the period. 3. The difference created by using two rates is shown as a **[currency translation difference](https://1flux.ai/glossary/currency-translation-difference)**, rather than buried in profit. The AED and SAR are both pegged to the US dollar (AED 3.6725 and SAR 3.75 to USD 1), so the rate between them barely moves. Translation differences between a UAE and a Saudi company are therefore usually small. They grow when the group currency floats against both, for example if you report in EUR or GBP, or when you add an entity with a floating currency such as INR. Two more decisions matter. Close each entity’s month before the group close, so you don’t consolidate numbers that will still change. And if a subsidiary isn’t wholly owned, statutory group accounts need a minority (non-controlling) interest. ## Intercompany: plan it before your companies trade with each other Intercompany transactions are sales, recharges and loans between companies in the same group. They’re real for each company, but they cancel out for the group as a whole. [Intercompany elimination](https://1flux.ai/glossary/intercompany-elimination) removes them on consolidation, so the group doesn’t report revenue it earned from itself. Elimination only works when both sides agree. Common problems: - **Timing:** the UAE company invoices on 30 September; the Saudi company books it on 2 October. - **Currency:** the invoice is in AED, but the Saudi company records it in SAR at a different rate. - **Missing tags:** nothing on the transaction says which group company is on the other side. Rules that prevent most mismatches: 1. Use dedicated intercompany receivable, payable, revenue and cost accounts. 2. Record the counterparty company on every intercompany transaction. 3. Agree a month-end cut-off and confirm balances between companies before closing. 4. Settle intercompany balances regularly rather than letting them build up. 5. Document pricing between companies; both countries have transfer pricing rules for related parties, so agree the approach with your tax adviser. ## How does 1flux handle companies in two countries? 1flux runs several legal entities in one workspace, each with its own books. Legal entities can be registered in the UAE, Saudi Arabia and India. In 1flux The entity switcher in 1flux: the top bar always shows the current entity and currency, for example AE · AED. View as text 1. The finance manager is working in Sadaf Building Supplies LLC, whose books are in AED. 2. They open the entity switcher in the top bar (⌘⇧E). 3. They choose Sadaf Trading Company. 4. The page now shows the books of Sadaf Trading Company in SAR. Each entity keeps its own currency, numbering, warehouses and books. - **Separate books per legal entity.** 1flux keeps a separate double-entry set of books for each entity, on a shared master chart for group roll-up, with its own accounting periods. - **Per-entity settings and identity.** Each entity has its own country pack, base currency, time zone, registrations (UAE TRN, corporate tax TRN and trade licence; Saudi CR, VAT number and unified number), Arabic legal name and address, Saudi national address, logo, bank details, signatory, numbering for ERP documents such as sales orders, invoices, purchase orders and journals, warehouses and costing method. - **VAT per country.** The UAE pack seeds VAT 5% input and output codes and zero-rated; the Saudi pack seeds VAT 15% input and output and zero-rated. Input and output VAT post to their own accounts, and you prepare VAT returns for the UAE and Saudi Arabia from the input and output VAT already posted. - **E-invoicing in both countries.** 1flux issues ZATCA-compliant e-invoices for Saudi Arabia, covering Phase 1 (generation) and Phase 2 (integration with ZATCA’s Fatoora platform), and supports UAE e-invoicing under the Federal Tax Authority’s programme, ready for the 2027 go-live dates. See [e-invoicing in 1flux](https://1flux.ai/products/e-invoicing). - **Always know where you are.** The entity switcher in the top bar (⌘⇧E) shows the current entity and currency, for example “AE · AED”. - **Access by entity.** Members can be limited to specific legal entities, set when you invite them. - **Documents from the right company.** Each quotation is issued by one of your entities, with its letterhead, registrations and bank details. Issued quotations freeze those details, so later edits don’t rewrite them. - **Statements per entity.** Profit and loss and balance sheet for each legal entity, straight from the ledger. - **Group structure.** Record parent and subsidiary links with an ownership percentage and an effective date. - **Consolidation run.** 1flux combines every operating entity’s ledger into a group currency. Income and expenses use the month’s average rate and balances the closing rate, with a visible translation difference. Runs can be draft or final, and **a final run requires every entity’s month to be closed**. Results export to CSV. [How multi-entity works in 1flux](https://1flux.ai/platform/multi-entity) [Multi-entity consolidation](https://1flux.ai/products/accounting/consolidation) ## A setup checklist for a two-country group Tick items as you go; your progress stays in this browser. Two-country group setup 0 of 8 done - \[ ] Choose the group reporting currency, and agree it with your auditor. - \[ ] Agree one chart of accounts structure, with local codes mapped to group accounts. - \[ ] Set each entity's fiscal year, costing method and cutover date. - \[ ] Load each entity's VAT codes, registrations, addresses, letterhead and bank details. - \[ ] Decide which customers, suppliers and items are shared across the group. - \[ ] Create intercompany accounts for each pair of companies that trade together. - \[ ] Agree who maintains exchange rates and how often. - \[ ] Close each entity's month before running the group consolidation. For the wider regional picture, read about [running 1flux in Saudi Arabia](https://1flux.ai/solutions/saudi-arabia). Related solution ### [1flux for business groups and holding companies](https://1flux.ai/solutions/business-groups) Separate books per company, entity-level access and a consolidated view across the group. FAQ ## Questions, answered Still deciding? [Talk to sales](https://1flux.ai/contact) ### What is multi-entity accounting? Multi-entity accounting is keeping the books of several legal companies in one system, with a separate ledger, currency, tax registrations and accounting periods for each. The system shares structure such as the chart of accounts, customers and items, and combines the ledgers through consolidation when you need group figures. It suits groups whose companies share customers, suppliers, stock or management, such as a UAE company with a Saudi subsidiary. ### Do I need separate books for my UAE and Saudi companies? Yes. A UAE company and a Saudi company are separate legal persons. Each files its own VAT returns, registers with its own tax authority and prepares its own statutory accounts, so each needs its own ledger. Separate books don't have to mean separate systems: a multi-entity system keeps the ledgers apart while sharing the setup, the master data and a consolidated group view. ### How do you consolidate companies in two countries? Close each company's month first. Then translate each ledger into the group currency, using the period's average rate for income and expenses and the closing rate for assets and liabilities, and show the resulting translation difference separately. Eliminate balances and transactions between the two companies, and, if the subsidiary isn't wholly owned, calculate the minority interest. Review the result with your auditor before relying on it. ### What are intercompany eliminations? Intercompany eliminations remove transactions and balances between companies in the same group when you consolidate. If your UAE company sells to your Saudi company, each records a real sale or purchase, but the group hasn't earned anything from an outside customer. Elimination cancels the matching revenue, cost, receivable and payable, so group figures show only trade with third parties. ### Can each company in the group keep its own currency and VAT codes in 1flux? Yes. Each legal entity in 1flux has its own base currency and country pack: the UAE pack seeds VAT at 5% and the Saudi pack at 15%, plus zero-rated codes, and input and output VAT post to their own accounts. Each entity also has its own registrations, letterhead, numbering for ERP documents, warehouses and books, all in one workspace. ### Does 1flux produce a profit and loss for each company? Yes. 1flux produces a profit and loss statement and a balance sheet for each legal entity, straight from the ledger, so your UAE and Saudi companies each have their own statements. For the group, a consolidation run combines every operating entity's ledger into one group currency as a consolidated trial balance, with the translation difference shown and a CSV export. Related ## Keep exploring ### [Multi-company and multi-entity](https://1flux.ai/platform/multi-entity) Several legal entities in one workspace, each with its own registrations, currency and books. ### [Multi-entity consolidation](https://1flux.ai/products/accounting/consolidation) Every company's ledger in one group currency, with a visible translation difference. ### [Business groups](https://1flux.ai/solutions/business-groups) Every company in one workspace, each with its own books, and the group in one currency. ### [ERP for Saudi Arabia](https://1flux.ai/solutions/saudi-arabia) A Saudi company set up properly: 15% VAT, CR, national address, Arabic quotations and ZATCA e-invoicing. ### [Multi-currency and Arabic](https://1flux.ai/platform/arabic-and-multi-currency) Any currency per document, three-decimal rounding, realised FX, and Arabic names, search and quotations. Last updated 11 October 2026