Project for the Reduction of the Administrative Burden in Cyprus March 13th 2014 Project Information Contracting Authority Ministry of Finance, Directorate of Economic Research and EU Affairs Start Date : November 2009 End Date : February 2011 Budget : ~ € 500K Utilized subject matter experts from Germany, Belgium and local resources in Cyprus 2 Project Scope 1. Measure AB affecting businesses 2. Identify the causes of AB (law, process, etc) 3. Provide suggestions to reduce AB Focus Points: • Businesses not individuals • Large number of businesses affected • Obligations included creating information to demonstrate compliance keeping records to allow inspection publishing information to third parties generating and providing reports to government 3 Project Steps 1. Collection of all the relevant legislation documents Collected 1.900+ legislations valid from 1960 to 2007 from over 50 Government Agencies/Departments 4 Project Steps 2. Mapping of all Information Obligations More than 5.500 Information Obligations (IOs) affecting businesses were identified in the legislation and recorded in tables 5 Project Steps 3. Selection of the 8 National Priority Areas (NPA) Used quantitative and qualitative criteria, such as: • Number of Information Obligations • Number of affected businesses • Source of legislation (National vs. European) • Likelihood to reduce Administrative Burden • Type of affected businesses (small – medium) • Examples from other countries • Other criteria (Economy, Foreign Investments etc) Deliberation – Consultation with relevant bodies 6 National Priority Areas Immigration Agriculture Internal Revenue Company Registrar Social Security Environment Tourism VAT 7 Project Steps 4. Analysis of the IOs of the 8 NPA Each Information Obligation was broken down into Data Requirements and it’s associated Activities and classified as Easy, Medium or Hard Using data from 600 questionnaires collected from businesses and a validation process from expert groups, timetables were constructed The resource cost for 3 professional levels was calculated Affected number of businesses for each IO was estimated 8 Project Steps 5. Calculation of AB for each IO using the Standard Cost Model Administrative Cost = Time x Rate x Population Administrative Cost = Administrative Burden + BAU 9 Project Steps 6. Provide suggestions for the reduction of the AB • Calculate Total AB • Locate areas with high AB • Identify causes of AB (law, process, repetition, etc) • Provide suggestions to reduce AB • Perform Impact Analysis on suggestions Technology Legislation Adjustments Change in Process/Activities Project Steps 6. Provide suggestions for the reduction of the AB Horizontal Suggestions ( 4 ) Vertical Suggestions ( 29 ) Project Results Project Results TOTAL COSTS FOR THE 8 PRIORITY AREAS TOTAL COST ADMIN BURDEN % BUSINESS AS USUAL % 1.008.561.085 704.604.196 70% 303.956.889 30% 13 Project Results Administrative Burden per Legislation Area Legislation Area € 383.159.511 1 Internal revenue 2 Registrar of Companies 195.171.269 3 VAT 78.935.375 4 Social Security 39.521.511 5 Environment 4.524.888 6 Immigration 2.394.472 7 Tourism 744.270 8 Agriculture 152.900 TOTAL 704.604.196 14 Project Results ADMINISTRATIVE BURDEN REDUCTION Horizontal Suggestion 1 (€) % Vertical Suggestions (€) % 31.869.262 4% 123.540.523 18% Total Reduction % 155.409.785 22% 15 Sample Suggestions Horizontal Suggestions Promotion of the Government Electronic Systems Campaign to promote the electronic services of the Government. Offer incentives to stimulate the use of the electronic systems and at the same time counter-incentives to reduce the usage of the traditional methods Other Horizontal Suggestions - e-Filing - Payments Portal - Data Warehouse 17 Sample Suggestions - Internal Revenue Reduce record-keeping requirements from 7 to 6 to 5 yrs Establish minimum contract amounts for stamps Automated Payments for PAYE tax 18 Sample Suggestions – Department of Registrar of Companies and Official Receiver Fast-track registration of companies using pre-defined templates Allow the submission of financial statements in English Language Electronic Submission of Annual Report and other forms 19 Sample Suggestions - VAT Reduction of the number of VAT filings per year, based on a company classification scheme Simplification of the payment process, to eliminate the need for presence both at the Bank and the VAT offices 20 Sample Suggestions – Social Security Simplification of the current process to obtain access to the electronic payments system Create fast track counters to service customers with single payments 21 Sample Suggestions - Environment Prepare templates for the compliance report and the non-conformity report Simplification of the method used to evaluate the Preliminary Report on Environmental Impact 22 Sample Suggestions – Immigration Department Unification of forms M88 (Entry Visa), M61(Temporary Stay) and M64 (Work permit) 23 Other Government Transformation Projects Sample Government Transformation Projects Agency : Ministry of Interior, Town Planning and Housing Department Topic : Study for establishing and operating a Single Town Planning Authority Year : 2011-2012 Agency : Cyprus Energy Regulatory Authority Topic : Business Transformation and Automation of the CERA Year : 2012-2013 Agency : Ministry of Interior, Department of Lands and Surveys Topic : Strategic Plan and automation of the Department of Lands and Surveys Year : 2012 – ongoing Agency : Cyprus Tourism Organization Topic : Reorganization of the Cyprus Tourism Organization Year : 2013 - ongoing Agency : Cyprus Ports Authority Topic : Advising CPA for the implementation of a Port Community System Year : 2012 - ongoing 25 Lessons Learned What causes Administrative Burden Too many repetitions (monthly, quarterly submissions) Personal presence required for information submissions Manual Payments (cheques) Lack of information inter-exchange between departments Unnecessary/difficult requirements on forms – absence of instructions Submission of duplicated information (on forms & evidence) Minimal use of automated systems – hard to use, unknown to citizens– 27 Other Typical Observations Lack of standardization - Instructions, requirements, documentation, process, may differ among tellers Complicated processes, often contain unnecessary steps Unnecessary supporting documentation required often created by same dept asking for it Unnecessary requirement for signature Electronic signature vs. Login Authentication vs. Email Personal Data Protection misinterpretation 28 Andreas Athanasiades Principal Management Consulting © 2014 KPMG Limited, a Cyprus Limited Company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. 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