Project for the Reduction of the Administrative Burden in Cyprus March 13 th 2014

Project Information 2 Start Date: November 2009 End Date: February 2011 Budget: ~ € 500K Contracting Authority Ministry of Finance, Directorate of Economic Research and EU Affairs Utilized subject matter experts from Germany, Belgium and local resources in Cyprus

Project Scope 3 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

Project Steps 4 1.Collection of all the relevant legislation documents Collected legislations valid from 1960 to 2007 from over 50 Government Agencies/Departments

Project Steps 5 2.Mapping of all Information Obligations More than Information Obligations (IOs) affecting businesses were identified in the legislation and recorded in tables

Project Steps 6 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

National Priority Areas 7 ImmigrationAgriculture Internal Revenue Company Registrar Social Security EnvironmentTourismVAT

Project Steps 8 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 time rate population

Project Steps 9 5.Calculation of AB for each IO using the Standard Cost Model Administrative Cost = Time x Rate x Population Administrative Cost = Administrative Burden + BAU

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 Project Steps 6.Provide suggestions for the reduction of the AB 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

13 TOTAL COSTS FOR THE 8 PRIORITY AREAS TOTAL COSTADMIN BURDEN%BUSINESS AS USUAL% % %

Project Results 14 Administrative Burden per Legislation Area Legislation Area€ 1 Internal revenue Registrar of Companies VAT Social Security Environment Immigration Tourism Agriculture TOTAL

Project Results 15 ADMINISTRATIVE BURDEN REDUCTION Horizontal Suggestion 1 (€) % Vertical Suggestions (€) %Total Reduction% % % %

Sample Suggestions

17 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

18 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

19 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

20 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

21 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

22 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

23 Sample Suggestions – Immigration Department  Unification of forms M88 (Entry Visa), M61(Temporary Stay) and M64 (Work permit)

Other Government Transformation Projects

25 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: Agency: Cyprus Energy Regulatory Authority Topic: Business Transformation and Automation of the CERA Year: 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: ongoing Agency: Cyprus Ports Authority Topic: Advising CPA for the implementation of a Port Community System Year: ongoing

Lessons Learned

27 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–

28 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.  Personal Data Protection misinterpretation

© 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. All rights reserved. Andreas Athanasiades Principal Management Consulting KPMG LimitedTel: Esperidon str 1087 Cyprus