Smart Regulations, Strong Business

Annex A. Typology of simplification and regulatory burden reduction approaches and tools

Government approaches to simplification and regulatory burden reduction serve a spectrum of objectives and needs and utilise various tools. Often, concepts overlap, definitions across countries vary and there can be a lack of clarity as to their ultimate objective in public discourse.

This typology aims to clarify key approaches and tools across this spectrum (Figure A.1). It draws on a draft prepared for the 32nd session of the Regulatory Policy Committee in April 2025 [GOV/RPC/RD(2025)1] and subsequent written feedback received by RPC delegates.

Moving from left to right, the focus shifts from reducing procedural burdens to the removal of regulations and underlying policy intent altogether. It is important to recognise that many of the tools cannot be strictly tied to just one dimension. For example, whether one-in, x-out approaches, sunset clauses and regulatory guillotines are used to address regulatory burdens while maintaining or removing original policy objectives ultimately depends on the political motives driving reform. For this reason, the revised version no longer links individual simplification and burden reduction tools to a single approach, but lists them in alphabetical order.

While the typology heavily draws on existing OECD work, it should be considered a living document to inform discussions and help promote a common understanding of approaches and tools used, as well as their respective objectives and limitations.

Figure A.1. Simplification and regulatory burden reduction across the spectrum

General approaches to simplification and regulatory burden reduction

Regulatory rationalisation

Approaches covered under regulatory rationalisation aim to eliminate regulations that have become outdated or redundant, while preserving the core policy objectives. The process is technical and apolitical, focused on removing rules that no longer serve a practical purpose. Examples include repealing duplicative laws or discarding regulations made obsolete by technological progress or market changes.

This can involve eliminating outdated licensing requirements for occupations or businesses that no longer reflect current industry standards, such as certifications for trades rendered unnecessary by technological advances. Similarly, outdated tax filing requirements for small businesses can be repealed, as digital platforms now automatically generate and submit tax data, rendering manual processes unnecessary.

Administrative simplification

Administrative simplification focuses primarily on reducing administrative complexity and costs, commonly referred to as “red tape”. These initiatives aim to identify and eliminate unnecessary complexities, redundancies, inconsistencies and contradictions in administrative procedures that impose undue burdens on citizens and businesses. Such efforts often enjoy broad political support, precisely because the costs and frustrations with bureaucratic complexities transcend ideological divides. Successful administrative simplification initiatives can transform public service delivery by optimising interactions between citizens, businesses and government through a human-centred approach, significantly reducing complexity and lowering transaction costs – often achieved through the strategic use of digital technologies.

Despite its broad appeal and short-term cost savings, administrative simplification focuses exclusively on administrative costs, without considering other sources of regulatory costs and complexity (e.g. direct compliance expenses) or cumulative and second-order effects (e.g. impacts on innovation, economic growth).

Regulatory stock review and improvement

The main objective of approaches covered under regulatory stock review and improvement is to ensure that existing regulations are fit for purpose, achieve their intended objectives effectively and minimise unintended consequences. This is particularly important in a rapidly evolving technological and economic landscape, where digital transformation, artificial intelligence and cross-sectoral interdependencies are accelerating the pace of change, challenging traditional regulatory boundaries and requiring frameworks that are agile and resilient to emerging risks.

Despite the importance of demonstrating regulatory performance to build legitimacy, foster buy-in and strengthen trust, OECD data consistently show that countries underinvest in and underuse instruments designed for this purpose, such as ex post evaluations and post-implementation reviews.

Deregulation

Deregulation refers to the complete or partial removal of regulations to improve economic performance, often in response to perceived regulatory overload. It typically reflects a change in policy direction (as opposed to regulatory rationalisation) and can (but not necessarily must) expose trade-offs between market efficiency, consumer protection and broader public interest goals.

Deregulation can take several forms, ranging from structural market reforms to targeted changes in rules. The term itself is often politically contested, used both by advocates of market liberalisation and by critics concerned about weakened protections and public interest safeguards.

Overview of common simplification and regulatory burden reduction tools

A justification‑first approach to procedures

No regulatory procedure, step, or related information obligation should exist unless this is justified. This also means regularly revisiting all existing processes to ensure they genuinely support a policy objective and are the lightest regulatory tool capable of doing so. In many cases, risks can be managed just as effectively through simple measures such as compliance promotion measures, engagement, communication etc., rather than adding procedural steps. Applying this mindset across the whole regulatory system helps avoid the accumulation of steps that persist only because “they’ve always been there,” or because they serve administrative convenience rather than public interest. By keeping only what is necessary (and designing it to be as straightforward as possible) governments can effectively reduce complexity.

Streamlining administrative procedures and setting reduction targets (e.g. using the Standard Cost Model)

Efforts to streamline procedures focus on simplifying and optimising administrative processes to eliminate unnecessary steps, reduce complexity and boost efficiency. For instance, automation and simplified documentation can cut administrative costs and complexity and delays.

In practice, administrative complexity can take multiple forms and may stem from overlapping formal requirements, duplication and fragmented service delivery access points. For example, businesses may have to submit the same identification documents to several agencies, provide paper certificates despite the existence of digital records or navigate separate portals for tax, licensing and reporting. Such practices raise compliance costs for users as well as create additional processing burdens for public institutions.

To identify the roots of these burdens, both quantitative and qualitative tools can be used: qualitative methods (such as user-experience or satisfaction surveys) help uncover real-life difficulties, while quantitative approaches (such as the Standard Cost Model) make it possible to measure administrative burdens. Used in combination, these tools offer a comprehensive understanding of where complexity comes from and guide the development of well-targeted and effective simplification solutions. The Standard Cost Model (SCM), widely used across OECD and non-OECD countries to estimate administrative burdens, systematically maps regulatory requirements and breaks them down into individual compliance obligations. The time and cost of each compliance obligation are then calculated and aggregated to determine the total administrative burden. The SCM helps identify bottlenecks and informs measures to reduce reporting frequency, streamline regulatory scope, and, where appropriate, exempt SMEs from certain obligations. Since the introduction of the SCM in the early 2000s, many countries have adopted quantitative targets to reduce administrative costs, often using a defined baseline to sustain and measure progress.

Codification and consolidation

Codification organises and systematises laws or regulations into a structured code, making them more accessible and easier to understand. Consolidation refers to the process of combining multiple regulations into a single, coherent framework, thereby reducing redundancy and complexity. Both practices are used by countries to streamline regulatory frameworks, enhance clarity and reduce the administrative burden on businesses and citizens.

While codification and consolidation can make existing regulations easier to navigate and reduce the time required for regulated subjects to understand the rules that apply to them, they do not address regulatory quality or necessity per se.

Common commencement dates (CCDs)

Common commencement dates are specific dates set by governments on which new or amended regulations come into force. This practice aims to provide businesses with predictability and sufficient preparation time for compliance, thereby reducing administrative burdens.

CCDs can enhance predictability, however, they should be considered carefully in order to avoid a delay in the implementation of regulations needed to address immediate and urgent issues.

Data sharing

Effective data sharing allows public authorities to exchange and reuse information seamlessly, reducing duplication and administrative effort. By enabling data to flow securely across institutions, the implementation of the “once-only” principle is supported (see below), procedures can be streamlined and service delivery be improved. In regulatory stock reviews, shared data provides evidence to assess the effectiveness and impact of existing rules, identify overlaps and target reforms where they are most needed. In regulatory delivery and beyond, data sharing between authorities is crucial for effective risk-assessment. This allows for appropriate targeting of intervention choices, inspection planning, as well as risk analysis and prediction, which is key to make accurate decisions about appropriate regulatory tools to be used (i.e. licensing and permitting related tools, compliance promotion and engagement with businesses and citizens etc.). This supports using resources where it matters the most, while reducing regulatory burden for businesses which create lower risks or manage risks appropriately.

Digitalising regulation

Digitalising regulation involves the strategic use of digital technologies and data to transform regulatory policy and systems. By enabling automated compliance checks, machine-readable legislation and predictive tool such as AI and machine learning, governments can process applications more efficiently, conduct risk analysis and implement targeted regulatory interventions. These capabilities can reduce administrative workloads, speed up the implementation of new legal requirements and allow regulatory changes to be automatically integrated into compliance monitoring systems, improving service delivery and lowering burdens for citizens and businesses.

Beyond operational efficiencies, digitalising regulation also supports broader government administration and service delivery reforms. When co-ordinated with administrative simplification efforts, digital transformation can streamline underlying government processes, facilitate secure data sharing (see above) across institutions and implement the “once only” principle (see below) to avoid unnecessary burdens on citizens and businesses. To realise these benefits, the use of digital technologies and data must be balanced with robust safeguards, transparency and measures to address risks related to data privacy and security, and potential biases in AI algorithms, in order to uphold public trust.

Once only principle

The "once only" principle (OOP) is a concept where individuals and organisations should only have to provide certain information about themselves to public authorities once. Government departments and agencies should then share and reuse this data internally, with the consent of users, rather than repeatedly asking for the same information (see “data sharing“). This eliminates the need for repeated data submissions, thereby reducing the burden on citizens and businesses. It can also empower citizens to more easily manage and oversee the personal data processed by public authorities. Reusing existing data, with appropriate data protection safeguards, makes administration processes more efficient and faster, reducing the time and effort required from both public authorities and the public.

Implementing the once only principle requires good data governance and management of base registries as well as technical means to ensure data privacy, information security and accuracy in data sharing.

One-stop shops

One-stop shops bring together a range of information requirements in a physical and/or virtual location. Usually the objective of physical one-stop shops is the delivery of individual services (i.e. different government entities are present at the one-stop shop providing their own services) and integrated services (i.e. the provision of services tend to be based on a single life event for officials to resolve all required transactions with the citizen or business in a holistic manner). The main model of online one-stop shops (also referred to as “single digital gateways”) is based on providing either individual or integrated services (or both), based on user needs, allowing citizens and businesses to access multiple government services through central “umbrella” portals. By reducing the complexity and time associated with navigating various government departments, one-stop shops aim to facilitate access to services, alleviate administrative burden, increase compliance and generate cost savings for government.

While one-stop shops streamline access to information and services, they do not address the quality or necessity of regulations per se. Moreover, the implementation of one-stop shops requires strong and effective inter-agency co-ordination and data integration, which can be resource-intensive.

Risk-based and streamlined licensing and permitting

Streamlining licensing and permitting (L&P) can reduce administrative burdens by simplifying procedures for businesses and citizens seeking a licence or permit. Badly designed L&P procedures can impose significant burden, especially if processes are lengthy and demand extensive documentation or multiple approvals across agencies. A risk-based approach can help ensure that only essential processes and approvals are required to achieve key outcomes, such as safety and environmental protection. Simplifying rules and procedures enhances their clarity and facilitates compliance. By reducing complexities and standardising formats, language, and communication, L&P authorities can increase compliance promotion and improve efficiency and clarity for both businesses and citizens.

Risk-based, targeted and streamlined inspection procedures

Targeted, streamlined, and risk-based inspection planning and procedures can reduce administrative burdens by focusing regulatory efforts where they are most needed. This approach ensures that inspections prioritise higher-risk businesses, while lower-risk ones face fewer or less frequent checks. By consolidating inspection functions and eliminating overlaps, resources are used more efficiently, minimising redundancy and compliance costs and complexity. This can enhance regulatory effectiveness, improve predictability for businesses, increase trust in governments and therefore improve spontaneous compliance, and ultimately lower the administrative load for both regulators and businesses.

Sludge audits and sludge reduction

Unnecessary friction, caused by complex regulatory and administrative requirements, can affect businesses and citizens alike. "Sludge audits" identify and remove unjustified frictions caused by complex regulatory and administrative requirements that impede people's access to government services and exacerbate psychological burdens. Behaviourally informed “sludge audits” tackle these issues by systematically identifying and quantifying psychological, financial and temporal pain points and costs, as well as highlighting disparities in equitable and efficient access to government programmes.

Sludge audits build upon, complement, and enhance traditional approaches to reducing administrative burdens and simplifying processes, and offer a more user-centred lens by focusing on lived experience and behavioural barriers. While they can be applied to improve the delivery and accessibility of services, sludge audits typically operate within the existing regulatory framework and may not directly address inefficiencies in the design or purpose of the regulations themselves.

Ex post evaluation of regulatory stock

Ex post evaluation (EPE) of the regulatory stock involves assessing existing regulations after their implementation to determine their effectiveness, efficiency and continued relevance. This process helps identify regulations that may be outdated, inconsistent, overlap or no longer serve their intended purpose. Findings from ex post evaluations can help governments streamline regulatory frameworks and eliminate or revisit regulations that impose unnecessary burdens without delivering proportional benefits, whilst enhancing their impacts. Systematic approaches to ex post evaluations can be underpinned by thresholds or other criteria to identify rules to be periodically reviewed. They can focus on individual regulations or packages of regulations on related issues. Evaluation of specific regulations can be complemented by hoc reviews that assess the alignment of the whole stock of regulation with overarching policy objectives, like compliance costs or competition (“principle-based reviews”), or entail a comprehensive analysis focusing on the nature and extent of regulation in specific industries, policy areas or sectors and its cumulative effects (“in-depth reviews”).

Post-implementation reviews (PIRs) are a subset of ex post evaluations conducted after regulations are enacted to assess their effectiveness, efficiency and overall impact. They help identify inefficiencies, excessive administrative burdens, and areas for improvement. Typically, PIRs are conducted shortly after a regulation enters into force at a set timing (usually within 1-3 years) to verify that it is being implemented as intended and to identify any immediate issues, essentially a first “reality check.” By contrast, ex post evaluations are carried out mostly ad hoc after a longer period, once the regulation has been in place long enough to assess its outcomes, impact and effectiveness. In practice, however, the distinction between EPEs and PIRs is not always clear-cut and terminology varies across jurisdictions.

EPEs and PIRs can be challenging because measuring regulatory benefits and opportunity costs is complex, especially when estimating counterfactual scenarios, and because political incentives often favour new measures over reviewing existing regulations. They also require substantial resources and should therefore prioritise the most burdensome or problematic areas, as identified in co-operation with all relevant stakeholders.

Harmonisation

In the context of simplification and regulatory burden reduction, “harmonisation” can refer to several related practices. One meaning concerns the alignment of regulatory standards or procedures across jurisdictions, including alignment with international or supranational frameworks. This can reduce regulatory divergence, facilitate cross-border activity and lower compliance costs for firms operating in multiple markets. At the same time, it may limit the ability of jurisdictions to adapt rules to national circumstances and can require significant co-ordination across different legal and administrative systems.

The term is also used for efforts to align regulatory requirements within a country, for example across regions or among levels of government. Such alignment can reduce fragmentation, create a more consistent regulatory environment and simplify compliance for businesses operating across jurisdictions. However, it may reduce flexibility for subnational authorities to adapt rules to local conditions or policy priorities.

In administrative simplification initiatives, harmonisation may also refer to the alignment of terminology, definitions or procedural requirements across different regulations. This can improve legal clarity and make rules easier for businesses and authorities to understand and apply. Its effect on the overall regulatory burden may nonetheless be limited if the underlying obligations remain complex or inconsistent.

Stakeholder-driven simplification and regulatory burden reduction

Placing stakeholders at the centre of simplification and regulatory burden initiatives helps ensure these efforts address the most pressing issues and deliver tangible real-world impact. Feedback from those subject to regulations provides insights into the practical difficulties faced by businesses and citizens and helps identify opportunities to reduce or avoid unnecessary burdens.

Engagement can take place both before and after regulation is adopted. Early consultation with affected stakeholders can inform regulatory and non-regulatory policy options before a decision to regulate is taken, providing evidence on the scale of the problem, likely impacts and possible alternatives.

For the existing stock of regulation, governments can use public stocktakes to gather feedback on the effectiveness, efficiency and burdens of legislation across the economy or in specific sectors. Public stocktakes exercises provide first-hand insights into how rules operate in practice and help identify priorities for simplification. They also enable policymakers to verify whether the assumptions underlying legislation or regulation continue to be valid and deliver the intended outcomes.

More targeted approaches include “reality checks”, which gather feedback directly from businesses affected by specific regulatory requirements to assess their practical impact. Ongoing feedback mechanisms also support the identification of simplification opportunities. Electronic mailboxes, standing committees or online platforms allow stakeholders to comment on existing regulations or propose improvements. Their effectiveness depends on adequate follow-up capacity to analyse submissions, co-ordinate across government and determine appropriate action.

Across these approaches, clear and transparent procedures are important to ensure balanced participation and reduce the risk of regulatory capture.

Regulatory budgets, including one-in x-out

Regulatory budgets are policy tools designed to manage the overall regulatory burdens imposed on users and the public sector. These budgets set quantitative limits on the costs that regulations can impose within certain specifications, like a given time period. A common approach to regulatory budget is the one-in, x-out approach (OIXO) which requires regulators to offset the introduction of new regulatory costs by eliminating existing ones, aiming to control and reduce the overall regulatory stock as well as the total costs of regulations.

While this approach encourages regulators to critically assess the necessity and efficiency of both new and existing regulations, it may oversimplify the complex nature of regulations. Additionally, it overlooks their benefits and risks disregarding important distributional considerations. As a result, regulations with important net benefits to society might be removed or the introduction of necessary new regulations discouraged.

Regulatory guillotines

The regulatory guillotine is designed to rapidly streamline and simplify a country’s regulatory framework by systematically reviewing and eliminating outdated, obsolete, unnecessary or overly burdensome regulations. If applied thoughtfully, regulatory guillotines can effectively eliminate outdated or legacy regulations, in particular in transforming or rapidly evolving economies.

While regulatory guillotines can significantly reduce the volume of regulations, they may also lead to the unintended removal of necessary rules if not carefully managed, potentially compromising regulatory objectives and predictability for regulated subjects.

Selectivity principle in regulatory enforcement and inspections

Not all state regulations require a specific enforcement agency to monitor business compliance. Alternative mechanisms may be more cost-effective and less burdensome. For regulations affecting market relationships and services, liability provisions for suppliers, along with adequate insurance, may suffice. As outlined in the OECD Best Practice Principles on Regulatory Enforcement and Inspections, if non-compliance is unlikely to cause irreversible harm or extremely costly damage that prevents the operator from meeting liabilities, and alternative mechanisms are viable, governments should consider market-based approaches. In severe cases, enforcement through judicial means may be required.

Sunset clauses

Sunset clauses are provisions embedded within legislation or regulations that set an expiration date for the law or specific regulatory measures unless they are explicitly renewed or extended. Countries implement sunset clauses as a mechanism to ensure that regulations remain relevant and effective over time. Whilst sunset clauses might not in and of themselves mandate a review, they can provide an incentive for policymakers to assess the continued necessity and impact of the regulation before renewing and extending it.

However, available evidence suggests that regulations are often renewed without any changes, pointing to a significant implementation gap. The effectiveness of sunset clauses therefore depends to a large extent on the quality of the review that is being conducted and whether the latter is independent from political considerations. Moreover, whereas sunset clauses typically provide a stable regulatory environment in the short term, they might reduce predictability for regulated subject as their expiration approaches.