Regulatory burdens are seen as a significant – and growing – challenge. Based on new perception survey data, this chapter explores government and business organisations’ current views on regulatory burdens. It provides a diagnostic of where burdens are felt most acutely in terms of industries and policy areas and identifies specific drivers and pain points. In doing so, it highlights where views diverge between governments and business organisations, pointing to potential “blind spots” that may limit the effectiveness of simplification measures.
Smart Regulations, Strong Business
Enabling Growth and Societal Protection in a Fast‑Changing World
Abstract
Regulation is a constant balancing act of costs and benefits. As discussed in Chapter 1, governments set regulatory requirements to promote a range of outcomes – for instance, health and safety for citizens, positive environmental outcomes and well-functioning markets. But in seeking to change behaviours, regulation will naturally also cause friction for those who have to comply with it. Businesses will perceive this as costs or burden. Some degree of burden is unavoidable to achieve public value, societal cohesion and sustainable growth; but in some cases, burdens may be excessive and unnecessary, negatively impacting economic activity. The latter is especially true when burdens arise from an accumulation of regulations that overlap or are overly complex. The challenge for governments is to identify those unjustified burdens and take steps to remove or minimise them. Understanding where and how burdens arise is thus essential for governments to take action and simplify regulatory frameworks whilst upholding protections.
Businesses can provide a critical perspective in this regard, as they experience and navigate regulations in their day-to-day operations and can help reveal where burdens arise in practice. Perceptions on burdens and their acceptability predictably differ between government and businesses (as well as consumer groups, civil society, and other stakeholders). While businesses may focus on minimising costs and operational disruptions, consumers and civil society groups may prioritise regulatory protections and transparency requirements that enable them to hold actors accountable. Moreover, the experience of burden varies across countries, levels of government, sectors, and business types. For instance, industries subject to multiple licensing requirements, inspections, or reporting obligations due to the nature of their activities and the risks they manage accordingly face even greater compliance pressures when requirements accumulate or overlap.
It ultimately falls, however, to elected officials to make the judgement of when and how much burden is acceptable in order to meet policy goals. This judgement will vary based on the context, shaped by factors like the level of risk involved, business capacity to adjust and comply, political and economic priorities, and the institutional landscape in which regulation operates. For example, stringent compliance checks may be justified in sectors like aviation or nuclear energy where the risk to public safety is high and requires more stringent safeguards. In other sectors, where the benefit is less clear, the same burden could be deemed unnecessary. A country seeking to accelerate renewable energy deployment may streamline permitting requirements for wind and solar projects, while another prioritising environmental conservation or operating in a highly sensitive ecosystem may require more extensive environmental impact reporting. Policymakers must balance competing interests and relevant contextual factors in order to deliver on policy goals with minimal burden.
The goal, therefore, is not universal agreement on perceived or acceptable burden, but for governments to use feedback and evidence to inform assessment of trade-offs and well-calibrated simplification based on the following considerations: Are the burdens that exist justified by clear public benefits? Are they distributed reasonably among different actors? Are there blind spots where public analysis underestimates or overlooks the experience of burden? Are there tools or implementation approaches, like effective online and digital systems, that can be employed to reduce burden? Are existing burdens critical to implementing a policy decision, or are they the product of inefficiencies in how rules and processes are designed and delivered that can be addressed without compromising policy goals?
Data gathered through the Simplifying for Success (S4S) surveys, described in Box 1.2., help to unpack how and where regulatory burdens are experienced. The evidence set out in this chapter first highlights perceptions that the regulatory burden presents a significant challenge for businesses, and that this burden is seen to be growing over time. The chapter then provides a diagnostic of where regulatory burdens are most acutely felt in terms of industries and policy areas and identifies key drivers and pain points. In taking government and business organisation perspectives together, it helps to shed light on the extent to which perceptions of burdens diverge.
In an environment marked by economic uncertainty, technological disruption and geopolitical volatility, businesses face a wide range of pressures. Among the various pressures, regulation emerges as a defining challenge shaping how businesses operate. In more than 80% of surveyed countries, business organisations report regulatory requirements and compliance as one of the three most significant challenges they face. This is more than twice the share of other concerns like talent acquisition and retention, taxation, or geopolitical instability (Figure 2.1). To some extent, regulation underlies several of the identified challenges, including taxation, access to finance, and lack of a level playing field.
Note: Business organisations were asked to select the top 3 options. Where more than one business organisation responded in Germany and Türkiye and the responses diverge, those diverging responses were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
Business organisations report that the regulatory environment has effects on key aspects of the business landscape (Figure 2.2). In most countries, they perceive regulation as negatively affecting competitiveness (93%), investment (80%) and innovation (73%). At the same time, they recognise the benefits of regulation. In only 17% of countries, business organisations consider regulation to have a negative impact on the prevention of systemic risks. In over half of countries, they recognise regulation as having a positive impact on consumer protection.
Note: Where more than one business organisation responded in Germany and Türkiye and the responses diverge, those diverging responses were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
Across jurisdictions, the stock of regulations has expanded steadily over time as governments adopted new rules to respond to financial crises, public health emergencies, technological change, environmental concerns, and other developments (OECD, 2020[1]). While some deregulation has occurred in specific areas – for example, regulatory barriers to firm entry and competition in network sectors such as telecoms, energy and transport have declined over the last 30 years (OECD, 2025[2]) – new rules are often layered onto existing frameworks, increasing the volume and complexity of requirements, compliance procedures and administrative obligations. Without taking away from the legitimate policy objectives that these new measures may pursue, their cumulative effect contributes to a denser and more intricate regulatory environment that is more prone to duplication and inconsistencies. Against this backdrop, evidence points to a diagnosis shared by both government respondents and businesses organisations in most countries: current levels of regulation and bureaucracy are excessive (see Figure 2.3).
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results. 2% of government respondents answered “No opinion”.
Source: OECD S4S Surveys (2025).
Concerns about excessive regulation emerge in part from how businesses assess the balance between regulatory requirements and their intended objectives. Regulation will inevitably impose some degree of burden, as compliance obligations are necessary to protect public health, safety, the environment and market integrity; as discussed above, determining what constitutes an appropriate and proportionate balance is at the heart of the political debate, and answers will be largely specific to context and the actor. Only 26% of government respondents express the concern that regulatory requirements are not appropriately calibrated to the risks or goals they seek to achieve. Taken together with the perception among government respondents that regulation and bureaucracy are excessive, this may suggest that requirements are seen as proportionate in principle, even if the way they are delivered creates unnecessary burden in practice. By contrast, business organisations in 78% of countries express the same concern (Figure 2.4). This points to a significant perception divide over whether current regulatory frameworks strike the right balance between policy objectives and the burden they impose. This may point to an information gap (for instance, stemming from whether and how burdens are assessed) and reflect the broader considerations regarding the achievement of policy objectives governments will factor in.
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results. 9% of government respondents answered “No opinion”.
Source: OECD S4S Surveys (2025).
When requirements are not well aligned with the risks or objectives they seek to address, they can impose costs and constraints that exceed their intended benefits. Both business organisations and government respondents feel the current levels of cost associated with compliance are excessive (Figure 2.5). Perceptions of what constitutes an acceptable level of cost will inevitably vary across groups: policymakers, businesses, consumers, and civil society often approach regulation with different priorities – which shapes how they assess the balance between regulatory protections and compliance costs, and therefore what they consider to be excessive. Survey responses reflect this dynamic: in 81% of countries, business organisations feel full compliance is too costly, compared to government respondents in 49% of countries. Policymakers must be mindful of the extent to which this divergence may indicate information gaps, for instance, due to an underestimation in cost-benefit analysis or a lack of understanding of how compliance obligations impact business models (European Economic and Social Committee, 2025[3]) is exacerbating costs.
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results. Business organisations in 3% of countries answered “No opinion”. 9% of government respondents answered “No opinion”.
Source: OECD S4S Surveys (2025).
In addition to the scale, the trend of rising regulatory burdens is also a concern with businesses seeing them as a growing challenge. An Australian study reports that annual compliance costs to businesses doubled from 2013 to 2024 (Mandala, 2025[4]). In Canada, red tape was estimated to cost businesses CAD 17.9 billion in 2024 – up from 12.7 billion in 2020 (adjusted for inflation and reported in 2024 CAD value) (Boman and Cruz, 2025[5]). The proportion of businesses in the United Kingdom reporting an increase in compliance costs over the prior 12 months increased from 58% in 2022 to 65% in 2024 (UK Department for Business and Trade, 2025[6]). The S4S survey echoes these findings from an international perspective: business organisations across most countries (77%) indicate that administrative costs have increased over the past three years (Figure 2.6). This pattern suggests that regulatory and administrative burdens are not merely pressing concerns but are perceived to be intensifying – highlighting the urgency for action.
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
Altogether, these findings demonstrate across countries that regulatory and administrative burdens are perceived to be significant and increasing. The expansion of regulatory stock creates an increasingly complex framework for businesses to navigate and governments to deliver – with impacts on economic growth and productivity, as set out in Chapter 1. Addressing these challenges requires moving beyond the overall scale of burden to better understand where these pressures are concentrated and how they manifest – as set out in subsequent sections.
Understanding the scale of burdens is only the starting point; understanding where they are felt most acutely enables governments to prioritise and target simplification efforts where they can have the most impact. Regulatory and administrative burdens are not distributed evenly across the economy, as the characteristics of a business and its activities determines how it interacts with government and how easily it can absorb burden. Similarly, certain cross-cutting policy areas like taxation may inherently require more time and effort from businesses. This section draws on survey insights to understand these variations in order to help to pinpoint areas where prioritising reforms can deliver meaningful and necessary reductions in burden.
The size of a business plays a significant role in their experience of navigating compliance obligations and burdens. While larger businesses may have dedicated compliance teams and legal resources to manage complex requirements, smaller businesses often face the same obligations with far fewer internal capacities. Young and high-growth firms cite burden as a barrier to entry and expansion. In Europe, for example, 55% of SMEs flag regulatory obstacles and the administrative burden as their greatest challenge (BusinessEurope, 2025[7]). Reduced capacity and knowledge regarding regulations is also one of the barriers that SMEs, who account for a small share of exports compared to their share of turnover and employment, face in international trade (OECD, 2023[8]). Evidence shows both government respondents and business organisations across countries recognise the disproportionate costs that SMEs face, but notably diverge in their view of the experiences of large domestic companies (Figure 2.7).
Note: Respondents were asked to select the top 3 options. Where more than one business organisation responded in Germany and Türkiye and the responses diverge, diverging responses were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
Structured analytical approaches can help foster a better understanding of how different types of businesses will be impacted by specific regulatory requirements in the development phase of regulations. For instance, embedding an “SME Test” in ex ante impact assessment enables policymakers to anticipate if they will be disproportionately affected and consider mitigating measures as appropriate (Box 2.1).
The SME Test is an integral part of regulatory impact assessment (RIA) that ensures the specific impacts of regulatory proposals on small and medium‑sized enterprises (SMEs) are systematically examined. SMEs tend to be disproportionately affected by regulation due to their more limited administrative, financial and human resources. The primary purpose of the SME Test is to support proportionate regulation by identifying potential burdens on SMEs at an early stage, assessing their significance, and exploring ways to minimise unnecessary costs, while fully preserving regulatory objectives and ensuring a level playing field. When embedded consistently in RIA, the SME Test strengthens evidence‑based decision‑making and improves regulatory outcomes for the business environment.
The SME Test is typically structured around four main steps:
1. Preliminary assessment (identification of SMEs concerned): This screening stage determines whether SMEs are likely to be significantly affected by the proposed regulation. It considers issues such as administrative and compliance costs, impacts on market entry or exit, and potential effects on the competitiveness of SMEs. If no significant impact is identified, the SME Test can be concluded at this stage.
2. Consultation of SMEs: Where SMEs are affected, targeted consultation with SMEs and their representative organisations is essential. This step aims to gather evidence on practical implementation challenges, cost drivers and behavioural responses, and should be conducted early enough to influence the design of the regulatory proposal.
3. Measurement of the impact on SMEs: This step involves analysing and, where possible, quantifying the impacts of the proposed regulation on SMEs, and comparing them with impacts on large firms. Both quantitative and qualitative methods can be used, depending on data availability and proportionality considerations.
4. Assessment of alternative options and mitigating measures: If disproportionate impacts on SMEs are identified, regulators should consider alternative policy options or mitigating measures, such as simplified requirements, exemptions or thresholds, longer transition periods, or tailored guidance, ensuring consistency with regulatory objectives.
Source: (OECD, 2021[9]).
Certain sectors and business activities may also face heavier compliance demands due to the nature of the risks they manage, the number of authorities involved, or the complexity of the rules that apply to them. Industries that are subject to more stringent licensing, inspections, reporting obligations or cross-sector regulation often experience the greatest pressure, particularly where requirements accumulate over time or overlap across agencies. As Figure 2.8 demonstrates, both government respondents and business organisations see 1) construction and real estate and 2) public administration and procurement as priorities for burden reduction – highlighting a common recognition that these are areas in which burden tends to be concentrated. Business organisations also strongly emphasise utilities, manufacturing and industry as priority sectors. This figure illustrates the average aggregate ratings among business and government respondents respectively; as such, further work would be needed to identify country-specific prioritisation.
Note: Answer categories are sorted based on the average between government respondents and business organisations, from highest to lowest. Numbers represent average survey responses by government respondents and business organisations on a 5-point scale, where 5 = Very high and 1 = Very low. This average does not include responses of “No opinion”. The “wholesale, retail, transport, accommodation and food” answer category includes: wholesale and retail trade; repair of motor vehicles and motorcycles; transportation and storage; accommodation and food service activities. In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
Beyond – and within – sectors, burdens can also be concentrated in certain cross-cutting policy areas, regulatory instruments, and administrative processes. Since they apply across sectors and firms, inefficiencies in these processes and requirements can generate widespread costs across the economy. As a result, efforts to streamline these regulatory instruments and processes can also have a powerful impact in reducing compliance burdens across the whole economy. Figure 2.9 highlights such areas, as indicated by business organisations and government respondents when asked to identify the top three areas in which requirements should be reduced or simplified.
Note: Answer categories are sorted based on the average between government respondents and business organisations, from highest to lowest. Government respondents and business organisations were asked to select the top 3 options. In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
For instance, taxation emerges as an area of common concern, with both governments and business organisations often identifying it among their top three priorities for simplification. Businesses across sectors devote substantial time and resources to tax compliance, including preparing returns, maintaining records and responding to information requests (Eichfelder and Vaillancourt, 2014[10]). This administrative burden of tax compliance is especially significant for SMEs (OECD, 2009[11]). There is also a significant regional element as the practical ease of compliance often depends on taxation rules are implemented through regional and local administrative systems. In half of the 227 OECD regions with available data, more than 15% of firms found tax administration a severe obstacle to their current operations. In a quarter of regions, more than a third of firms did so (OECD, 2025[12]). Firms in regions with no urban centres or small cities are, on average, more likely to find tax administration a severe obstacle to their daily operations (29% compared to 19%), as such firms are likely to be smaller, have lower profit margins, and may have more limited access to business advisory services (European Commission, 2022[13]).
Taken together, Figure 2.8. and Figure 2.9 may also illustrate how priority sectors are affected and policy areas are linked. Businesses experience regulation (and burden) at the intersection of the two. Understanding both dimensions helps to pinpoint not only where burdens are most acute, but also which rules and processes are driving them. Certain sectors and policy areas naturally overlap. A given sector is also likely to be impacted by multiple policy areas, and vice versa. A construction firm, for example, must naturally navigate construction permits. They may also have to navigate labour regulations in dealing with their employees, taxation, trade procedures when they import materials, and public procurement processes when they bid on government contracts.
Across both figures, construction and planning emerge as the top issue recognised by governments and business organisations alike – in construction and real estate as a sector, and in the permitting for construction and planning activities. Box 2.2 expands upon this as a priority for simplification.
The construction sector is a top priority for regulatory simplification and burden reduction among respondents to the 2025 OECD Simplifying for Success (S4S) surveys, with strong agreement between government authorities (respondents in 62% of countries rate it a high or very high priority) and business organisations (61%). In particular, construction and building permits rank among the most frequently cited areas where regulatory burdens are considered acute.
The sector encompasses several interconnected sub-sectors, such as housing, infrastructure, energy-related construction and specialised developments (e.g. commercial and industrial development), each facing distinct regulatory challenges. Housing projects often encounter complex zoning rules and lengthy permitting approval processes; infrastructure must navigate environmental assessments, procurement procedures and multi-level governance; energy-related construction faces overlapping licensing technical requirements; and specialised developments must comply with sector-specific safety, environmental and land-use rules. Decentralised land-use authority and overlapping competencies also reduce the responsiveness of housing supply and delay construction activity.
Across countries, economic consequences of regulatory constraints in construction are significant. Construction productivity has declined in many OECD countries over the past decade. In the United States, for example, construction productivity has declined over the last 40 years, even as aggregate labour productivity in the US more than doubled between 1970 and 2024; declines have been most pronounced in regions with tighter constraints, including long permitting times and stricter land use regulations. These persistent productivity challenges have contributed in many countries to reduced housing affordability, weaker competitiveness and slower economic growth.
Regional aspects
Land-use regulation by subnational governments can be a source of administrative burden that hinders local economic development. Reviewing and removing unnecessary geographic restrictions can reduce housing costs, attract workers and investment, and thereby foster competition among firms, boosting innovation and productivity. Allowing more mixed-use neighbourhoods and moving away from single-use zoning could increase housing supply and encourage workers to move to productive regions, boosting overall productivity.
According to OECD evidence, the permitting process is broadly similar between countries but the efficiency of the process can vary across regions. Obtaining construction permits is generally time‑consuming, taking more than 70 days in half of the 227 regions with available data. Regions with longer approval times for construction permits also tend to have lower rates of firm creation.
Source: (OECD, 2021[14]) (OECD, 2025[2]); (OECD, 2025[12]).
Perceptions of where burdens are most acute do not always align between business and government, with several sectors and areas highlighted by business organisations receiving less emphasis in government responses. Various sectors such as utilities and manufacturing, for example, often operate under complex regulatory regimes involving environmental standards, safety requirements, technical regulations and sector-specific oversight – with operations potentially also cutting across subnational and international boundaries. Compliance in these sectors can involve continuous monitoring, reporting and inspections, creating ongoing operational burdens that may be more visible to firms than to policymakers designing the frameworks.
In cross-cutting areas emphasised by business organisations – like labour regulations and environmental protections – substantial compliance costs and administrative effort can emerge because they apply broadly across sectors and often require detailed documentation, regular updates and co-ordination with multiple authorities. Yet, while businesses seek lower compliance costs, other actors such as trade unions, environmental interest groups, and civil society may call for rigorous oversight and transparent reporting to ensure necessary protections are upheld. Achieving an acceptable balance is unlikely to fully satisfy any or all stakeholders, so policymakers must comprehensively identify, weigh, and communicate trade-offs. At the same time, policymakers must be especially mindful of potential blind spots where governments underestimate the day-to-day administrative load, and where concerns about burdens reflect inefficiencies that can be addressed without weakening policy objectives.
Government respondents also prioritise certain sectors (such as agriculture) and policy areas (business registration and licensing) – both of which are highly visible and tied to achieving broader economic priorities. Importantly, this should not be interpreted as business organisations suggesting that agriculture and registration and licensing are not important areas for simplification. Processes such as business registration and licensing are often central to government reform agendas because they shape market access – and inefficient processes can also be burdensome for governments to administer. Sectors like agriculture are also central to major policy priorities, like environmental protections, seasonal workers, trade, and food safety. High-profile initiatives like the European Union’s Common Agricultural Policy also feature targeted efforts to minimise sectoral burden – with smaller farms exempted from certain controls and updated satellite monitoring to reduce farm visits by national inspectors by up to 50% (European Commission, 2026[15]).
Beyond targeting priority sectors and policy areas where regulatory burden may be more concentrated, successful simplification needs to be grounded in a thorough understanding of how businesses are impacted. Burdens are rarely the result of regulation in the abstract; they stem from specific pain points that shape day-to-day business operations and manifest as different types of costs. Substantive compliance costs arise from meeting regulatory requirements themselves, whether purchasing new equipment, adjusting production processes, or investing in mandated technologies and controls. Administrative costs stem from information requirements associated with demonstrating compliance, such as understanding requirements, completing forms, maintaining records, preparing reports, and responding to information requests (OECD, 2014[16]).
When asked to identify the top three causes of burdens, business organisations in 67% of countries cite overall reporting costs (a part of wider administrative costs). By comparison, business organisations in 53% of countries cite substantive costs incurred to comply with content obligations in regulation as the greatest cause of burdens in their country (Figure 2.10). Business organisations in over one-third of countries also identify frequent regulatory changes, lack of co-ordination and lack of clarity as among the top three causes of burden. Naturally, many of these items are interconnected: for instance, clarity of regulations and consistency of enforcement will inevitably contribute to the overall costs incurred complying with those regulations. This highlights that administrative processes around regulation can be considered a significant source of burdens, and provides an indication of how burden can stem from inefficiencies and ancillary aspects of the regulation, rather than a substantive policy decision. These aspects of burdens may be feasible to target without compromising policy goals.
Note: Business organisations were asked to select the top 3 options. In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
It is important to recall, particularly when interpreting Figure 2.10, that data from the S4S surveys reflect perceptions of burdens rather than an assessment of their monetary value. The gap between reporting costs and substantive compliance costs indicates that business organisations in more countries identify reporting costs as a cause of burden; this should not be interpreted as minimising substantive compliance costs, or as implying that business organisations cite reporting costs as higher than substantive compliance costs.
Various factors may be considered as potentially contributing to the perception of administrative burdens, beyond direct economic costs. For instance, reporting and documentation requirements may be perceived as a dead weight while aspects of substantive compliance – such as the purchase of new equipment – may be seen as an investment in business operations. Reporting and documentation can be repetitive and visible; behavioural research shows that such tasks may be more easily recalled and weighted more heavily in perception (also known as an availability bias) (Lai, 2023[17]). Perception of burdens can also be exacerbated by psychological costs like uncertainty, frustration associated with navigating complexity, and perceived lack of control (Herd and Moynihan, 2019[18]). Nevertheless, this is not necessarily always the case, as administrative costs and burdens can compound over time. Ultimately, the perception still highlights the need for action in an area where simplification can be targeted to carry less cost on society.
Survey evidence highlights several recurring pain points within regulatory frameworks that can intensify the burden businesses face when complying with regulatory requirements. Some of these relate to the administrative processes implementing regulations, through which businesses interact with government – whether fulfilling reporting obligations, applying for licences and permits, or undergoing inspections. Others arise from the design and evolution of regulation itself – such as how rules are drafted, how often they change, and how well they align with other requirements. The following sub-sections examine these aspects in turn, drawing on both government and business perspectives to illustrate how they drive burden.
2.3.1. Drivers of burden in regulatory implementation
The way regulation is implemented by government bodies strongly influences the burden businesses experience. Many of the most tangible interactions between firms and governments occur through administrative processes such as reporting obligations, licensing and permitting, and inspections or enforcement activities – and as the data presented in this section outlines, these are among the strongest drivers of burden for businesses. While these processes are essential and cannot be fully eliminated, governments can take steps to ensure they are streamlined, predictable, and proportionate, so as to support compliance while minimising disruption to business operations.
Reporting and record-keeping
Reporting is both a critical tool as it is a source of frustration for businesses. On the one hand, reporting provides regulators with essential information to monitor implementation, identify and manage risks, ensure compliance and evaluate policy effectiveness. For other stakeholders like consumers, investors, and civil society, reporting disclosures can also provide valuable information on business practices and performance. On the other hand, as illustrated at the top of this section in Figure 2.10, reporting costs are most widely identified by business organisations as among the top three sources of burden – requiring firms to devote time, personnel and financial resources to data collection, verification and submission. In cases where reporting requirements are used as an alternative to traditional enforcement tools, some of the associated costs shift from government to businesses. Mandatory, detailed, or frequent reporting can improve oversight and transparency, but may also increase administrative burden and reduce operational flexibility. Reducing reporting requirements may ease compliance for businesses but will also limit the information available to governments and other stakeholders. A certain level of reporting cost is therefore both expected and necessary, but striking the right balance is critical: reporting frameworks need to generate meaningful information on compliance or policy targets while minimising unnecessary duplication and compliance effort.
As it stands, business organisations in 77% of countries report high costs associated with filing and reporting requirements; in 67% of countries, business organisations report high costs associated with documentation and record-keeping (Figure 2.11).
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results. Business organisations in 3% of countries answered “No opinion”.
Source: OECD S4S Surveys (2025).
Licensing and permitting
Licensing and permitting are one of the most generalised regulatory tools and most individuals or economic actors will interact with these systems at some point in their lives. Governments use these tools to give formal approval before certain business activities can begin, in order to manage risks and protect society, the economy or the environment. They are most appropriate when risks are high, irreversible or difficult to manage after the fact – like operating a childcare centre or placing a new medicine on the market. In practice, however, licensing and permitting have often been relied upon as a default option, driven by risk aversion in response to uncertainty or public pressure. As a result, they have often been applied also to low-risk activities. This creates complex systems that appear to provide reassurance, but in practice are frequently overbuilt, slow, and misaligned with actual risks (OECD, 2025[19]). Where systems are not aligned with available resources, regulators can struggle to process applications efficiently, leading to delays and backlogs. As a result, unnecessary burden can arise for businesses throughout the licensing and permitting process, ranging from excessive application requirements to extended decision timelines.
For businesses at the first stages of the licensing and permitting process – the application phase – a lack of government co-ordination behind-the-scenes can translate directly into unnecessary burden. One common manifestation of this is the need to submit the same documents more than once, which business organisations report occurs in 60% of countries. Overall, business organisations in only 13% of countries agree that permit application processes and timelines are co-ordinated across authorities (Figure 2.12). This fragmentation can increase the required level of effort and can slow the progress of applications before substantive review even begins.
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
The lack of timeliness in licensing and permitting decisions – reported by business organisations in 67% of countries – can have direct consequences. Delays in approvals can postpone or discourage investments, stall project implementation, and delay industrial development and technological roll-out (OECD, 2025[19]). For businesses that have already committed resources – such as securing financing, hiring staff or purchasing equipment – extended waiting periods can generate additional costs and operational disruptions.
Disproportionately heavy licensing and permitting processes can contribute to the lack of perceived timeliness, particularly when the activity is low-risk or resulting decisions are unpredictable. Across countries, business organisations express a sentiment that permitting processes and decisions may not be aligned with risk or consistent (Figure 2.13). In 16 out of 38 OECD countries, a licence can be required just to open a retail shop selling clothes, even though this is typically low risk (OECD, 2023[20]). That is time and money spent on paperwork and not on serving customers, creating jobs, or building their business. Such requirements can restrict access to markets, create barriers to entry for new entrepreneurs, and distort competition.
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
Licensing and permitting systems can also be inconsistent across jurisdictions, adding to regulatory complexity. While regional variations may sometimes be necessary to reflect local risks, such inconsistencies can hinder business operations, particularly for those working across multiple regions or borders (OECD, 2025[19]). Subnational governments often play a key role in licensing and permitting processes. As noted previously in Box 2.2, inefficiencies at this level can create major bottlenecks and contribute to regional disparities in business creation and growth within countries (OECD, 2025[12]). Box 2.3 discusses this further.
While most rules and regulations are set at the national level, subnational governments can often have important roles in business licensing and business registration. Variation in burden across subnational regions can impact business creation and boost growth.
From 2018 to 2021, it took more than two months on average to obtain an operating licence in a quarter of 229 regions, with a difference of more than one month between the slowest and fastest region in two-thirds of countries with available data. Regions where it took more than two months to obtain an operating licence saw 25% fewer firm creations compared to regions where licences were issued in less than a month.
Moreover, efficient permitting may particularly benefit small firms in less urban regions, which often have limited resources available for regulatory compliance. On average, 15% of firms consider obtaining a business licence a severe obstacle to their operations in regions with big cities, compared to 22% of firms in regions with no urban centres or small cities, even though firms in regions with big cities wait twice as long, on average, for their licence.
Source: (OECD, 2025[12]).
Enforcement
Enforcement activities can also be a source of regulatory burden for businesses. Inspections and compliance checks are essential tools for ensuring that rules are respected and that regulatory objectives are achieved. However, when enforcement practices are poorly co-ordinated or implemented inconsistently without clear communication, they can disrupt business operations and increase administrative effort. On inspections, for instance, firms may need to allocate staff time to prepare for inspections, respond to requests for information and accompany inspectors, sometimes on multiple occasions for similar issues. When the inspection process itself is inconsistent and unpredictable, it can be difficult for businesses to prepare and navigate each time. The burden is compounded when different authorities conduct separate inspections covering overlapping requirements. Reflecting these challenges, business organisations in most countries report that inspections are not predictable and risk duplication across authorities (Figure 2.14).
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
In 70% of countries, business organisations feel that enforcement approaches prioritise punishment over correction – which can further exacerbate unnecessary burden. On one hand, punitive measures are not inherently a bad thing. Deterrence plays an important role in enforcement and punitive sanctions can help to discourage non-compliance form the start. However, when regulators focus primarily on sanctions rather than helping businesses understand and remedy non-compliance, firms may face penalties for issues that could otherwise be addressed through guidance or corrective action. This can discourage open communication between businesses and regulators, reduce opportunities for (mutual) learning, and increase the perceived risk associated with routine inspections. Accordingly, OECD guidance stresses that enforcement systems should promote compliance through tools that help regulated entities understand their obligations, such as guidance and checklists (OECD, 2018[21]).
2.3.2. Drivers of burden in regulatory design
Even before regulations are implemented, the way in which they are written and designed impacts all regulated businesses, regardless of sector, type, or size. Characteristics such as the complexity of regulatory text, the frequency and predictability of rule changes, and the degree of alignment with related regulations all influence how easily businesses can understand and comply with requirements – and may be incidental inefficiencies that policymakers can address when designing rules without compromising on regulatory protections.
Complexity and predictability
Before businesses can comply with regulations, they must first identify the requirements that apply to them and interpret their obligations. When information on relevant rules is difficult to access or interpret, businesses incur additional search costs (i.e. the time, effort, and resources spent in locating, verifying, interpreting, and judging the applicability of regulatory requirements) that contribute to the overall burden of regulation. As an example, regulatory information that is dispersed across multiple sources and platforms may require a business to consult separate ministries and/or regulator websites or across different levels of government and legal databases to piece together the full set of applicable rules and obligations. This process not only takes up more time but can contribute to uncertainty about whether all relevant requirements have been identified. Consolidating regulatory information – including laws, regulations, standards, relevant guidance, and forward plans – on a single website in a user-friendly format can help mitigate these search costs; however, business organisations indicate that such consolidation exists in only 31% of countries (Figure 2.15).
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
Search costs can also arise when the regulatory text itself is complex, which some evidence suggests is increasingly the case. In the EU, the average length of each Commission legislative proposal has almost doubled from 1999 to 2024 (Marcus, 2024[22]) and the language has also become increasingly complex (Hurka, Haag and Kaplaner, 2021[23]). 85% of global executives surveyed by PwC said compliance requirements have become more complex over the past three years, with the majority stating that complexity has negatively impacted key areas that can drive growth to at least some extent. The top three areas identified were implementation and maintenance of IT systems and data; senior management attention and focus; and business transformation and focus (PwC, 2025[24]).
Length and complexity manifest as burden when they render texts difficult to understand and interpret, particularly in the absence of clear supporting communication and guidance. In these cases, businesses need to invest more in deciphering their obligations, diverting time and resources away from core business operations. Survey evidence suggests this is a common challenge in practice, with business organisations in 70% of countries reporting that they do not feel rules are easy to understand (Figure 2.16). Governments are naturally less likely to share this perception given their proximity to the rule-making process, as well as familiarity with policy intent and regulatory terminology. It is nevertheless important that they recognise this gap, as rules that appear clear from a policy perspective may still be difficult for businesses to interpret and apply in practice. A key aspect of this is how rules are communicated, with research suggesting that the use of bureaucratic language when communicating rules and compliance requirements exacerbates the perception of burden (Baekgaard, Döring and Thomsen, 2023[25]). This ultimately highlights the need for governments to provide accessible guidance, clear communication, and practical support to facilitate compliance.
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results. 3% of government respondents answered “No opinion”.
Source: OECD S4S Surveys (2025).
Concerns about clarity are compounded by the pace of change. In a fast-moving world where governments are pressed to react to evolving challenges in real-time (see Chapter 1), a certain level of regulatory change is inevitable and, indeed, at the core of agile regulatory approaches. Regulatory change, whether warranted of not, can be frequent. Illustrating this, OECD research found that nearly a third of government respondents revised their legal framework for public procurement more than eight times, averaging changes every 7.5 months (OECD, 2025[26]). Business organisations report frequent changes to regulation among the top three causes of regulatory and administrative burden (Figure 2.9). Among beneficiaries of the European Union Cohesion Policy funds, a much smaller share (29%) identify direct compliance with legislation as a top challenge in project implementation, compared to the difficulty of keeping pace with regulatory changes (40%). New and amended regulations require businesses to continually monitor developments, reassess compliance obligations and adjust internal systems – on top of implementing any changes in obligations. In 63% of countries surveyed, business organisations reported facing high administrative costs in staying abreast with changes in laws and regulations (Figure 2.17).
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
Even where regulatory changes are justified, uncertainty about their timing and direction makes it harder for businesses to plan ahead, allocate resources, and manage compliance effectively. This appears to be a widespread issue, with business organisations in 79% of countries indicating that changes to regulation are not predictable (Figure 2.18). Among government respondents, however, opinions are more mixed. This is not surprising, as policymakers have greater visibility over forthcoming reforms and timelines. However, it serves to highlight the importance of improved communication and forward-signalling from government on regulatory changes. Systematically publishing forward agendas could help to bridge this gap and limit instances where changes that seem foreseeable within government are experienced as abrupt by businesses. As of 2024, 23 OECD countries publish online a list of primary laws to be prepared, modified, reformed, or repealed in the next six or more months; 16 countries do so for subordinate regulations.
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results. 6% of government respondents answered “No opinion”.
Source: OECD S4S Surveys (2025).
To identify, interpret, and keep pace with evolving requirements, businesses may rely on specialist legal and compliance advice. While this support reduces the risk of non-compliance, it also comes at a reportedly high administrative cost (Figure 2.19). This may present a larger challenge for smaller firms that lack internal compliance capacity and must therefore rely more heavily on external expertise – at costs that can mean a direct reduction in profitability and retained earnings (OECD, 2001[27]).
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results.
Source: OECD S4S Surveys (2025).
Consistency
Even the simplest regulation does not exist or operate in isolation, and businesses are unlikely to engage with a single regulation at a time – interpreting and implementing requirements across numerous sector-specific and cross-cutting frameworks as well as across borders. Regulatory systems function most effectively when requirements are coherent and mutually reinforcing. When rules overlap, contradict one another, or are implemented differently across jurisdictions or authorities, businesses may face uncertainty about how to comply and incur additional costs in reconciling competing requirements. Consistency across regulatory frameworks – whether across sectors or levels of government – is therefore an important factor in limiting or creating unnecessary burden for businesses operating across multiple sectors, policy areas, and jurisdictions. Survey evidence suggests that perceptions on the level of consistency vary sharply between government and business: compared to government respondents in only 14% of countries, business organisations in 70% of countries feel regulations are generally not consistent with one another (Figure 2.20).
Note: In Germany and Türkiye, two business organisations answered the survey respectively; where the answers of the two respective organisations diverged, they were excluded from the aggregate results. 6% of government respondents answered “No opinion”.
Source: OECD S4S Surveys (2025).
This anticipated gap may reflect the different perspectives from which regulatory systems are viewed and experienced. Policymakers may have visibility over rules within their own remit but may be less aware of how requirements interact with those introduced by other countries, levels of government, or even regulators in other sectors that are also at the national level. This reinforces the importance of policymakers being mindful of potential visibility gaps that create unnecessary cumulative burden for businesses. For businesses operating across multiple regulatory frameworks, however, these interactions and inconsistencies are experienced directly. As a result, business organisations in over 1 in 10 countries identify different rules across levels of government and across countries as major causes of burden. Inconsistencies can also arise within national frameworks, as different ministries and regulatory bodies carry out mandates that apply to the same activity (for instance, where a food production facility is subject to rules under food, health, environment, and labour regulators). In 4 in 10 countries, business organisations identify a lack of co-ordination between different regulatory bodies at the national level as a leading source of burden.
Whether in the design of regulations, their implementation, or in particular sectors and policy areas, this chapter illustrates that burden does not arise from regulation in the abstract. Rather, it stems from specific features and processes in regulatory systems that shape how businesses experience regulations in practice. Pinpointing the areas where burdens are most acute and the drivers that generate them provides a map to help governments target simplification and burden reduction efforts where they can have the most impact. Building upon this, the next chapter turns to how governments are currently responding to identified burdens – examining the simplification and burden reduction initiatives being deployed and the practical challenges they face in translating ambition into lasting reductions in regulatory burden.
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