Original Research

An exploratory study of the effect of country-by-country reporting ambiguities on Johannesburg Stock Exchange-listed companies

Cara Thiart, George F. Nel
South African Journal of Economic and Management Sciences | Vol 21, No 1 | a2129 | DOI: https://doi.org/10.4102/sajems.v21i1.2129 | © 2018 Cara Thiart, George F. Nel | This work is licensed under CC Attribution 4.0
Submitted: 05 October 2017 | Published: 25 June 2018

About the author(s)

Cara Thiart, School of Accountancy, University of Stellenbosch, South Africa
George F. Nel, School of Accountancy, University of Stellenbosch, South Africa


Background: South Africa issued regulations implementing country-by-country (CbC) reporting standards for multinational enterprises (MNEs) on 23 December 2016. Country-by-country reporting will be applicable to all MNEs with a group revenue in excess of R10 billion.


Aim: The aim of the study was twofold: to identify ambiguities that might influence the filing obligation and subsequent scope of CbC reporting in South Africa and to quantitatively measure the potential impact of any identified ambiguities.


Setting: This study used data from Johannesburg Stock Exchange-listed companies.


Methods: The study commences with a review of the relevant regulations and other applicable literature and continues with a quantitative analysis exploring alternative interpretations deduced from this review.


Results: The review identified conflicting interpretations of how companies can be categorised as an MNE Group or not, as well as in measuring the revenue threshold. An analysis of the group structures and annual reports of a selected sample of 78 companies showed that the scope of CbC reporting will depend on the definitions applied to an MNE Group and revenue.


Conclusion: Further guidance is needed to determine whether non-controlling entities must be considered as Constituent Entities, as well as how to measure revenue (i.e. whether only the International Financial Reporting Standards [IFRS] 15 revenue line item should be used or whether other income should also be included).


country-by-country reporting; constituent entity; multinational enterprises; revenue; IFRS 15; base erosion and profit shifting; action 13; transfer pricing; ambiguities


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