Paying Agency (Amendment) Regulations, 2007

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 18,135, 12 ta’ Ottubru, 2007

L.N. 294 of 2007

AGRICULTURE AND FISHERIES INDUSTRIES

(FINANCIAL ASSISTANCE) ACT,

(CAP. 146)

Paying Agency (Amendment) Regulations, 2007

IN exercise of the powers conferred by article 7 of Agricultural

and Fishing Industries (Financial Assistance) Act, the Minister for Rural

Affairs and the Environment, with the concurrence of the Prime Minister

and Minister of Finance, has made the following regulations>

The title of these regulations is the Paying Agency Title.

(Amendment) Regulations, 2007 and they shall be read and construed

as one with Paying Agency Regulations, 2004, hereinafter referred to L.N. 126 of 2004.

as “the principal regulations”.

Regulation 2 of the principal regulations shall be amended as Amends regulation

2 of the principal

follows>

regulation.

(a) for the definition “certifying body” there shall be

substituted the following>-

“ “certifying body” means such units within the Internal

Audit and Investigations Directorate having the function to

carry out accreditation and certification<”<

(b) for the definition “competent authority” there shall be

substituted the following>-

“ “the competent authority” means the section in charge

of European Union Affairs within the Ministry responsible

for agricultural affairs and fisheries<”<

(c) the definition “Commission Regulation 1663#95”

shall be deleted< and

(d) for the definition “ “Fund” or “EAGGF” ” there

shall be substituted the following>-

“ “EAFRD” means the European Agricultural Fund for

Rural Development<

“EAGF” means the European Agricultural Guarantee

Fund<”.

Regulation 3 of the principal regulations shall be amended as

(a) for sub-regulation (3) thereof, there shall be substituted

the following>

“(3) The competent authority shall dispose of an

organisational structure allowing it to execute the following

main functions in respect of EAGF and EAFRD expenditure>

(a) the authorisation and control of payments to

establish that the amount to be paid to a claimant is in

conformity with Community rules, which shall include,

in particular, the administrative and on-the-spot controls<

(b) the execution of payments to pay the

authorised amount to the claimant, or his assignee, or,

in the case of rural development, the Community co-

financing part<

(c) accounting for payment to record all payments

in the agency’s separate accounts for EAGF and EAFRD

expenditure, in the form of an information system, and

the preparation of periodic summaries of expenditure,

including the monthly, quarterly (in respect of EAFRD)

and annual declarations to the Commission. The accounts

shall also record the assets financed by both Funds, in

particular concerning intervention stocks, uncleared

advances, securities and debtors.”< and

(b) for sub-regulation (4) thereof, there shall be substituted

the following>

“(4) (a) The internal control activities shall cover at

least the following areas>

(i) the monitoring of the technical services and

delegated bodies responsible for carrying out the controls

and other functions to ensure a proper implementation

of regulations, guidelines and procedures<

(ii) the initiation of system changes in order to

improve control systems in general<

(iii) reviewing claims and requests submitted to

the agency as well as other information providing

suspicion of irregularities.

(b) The agency shall adopt in this respect the

following procedures>

(i) the internal audit service shall be independent

of the agency’s other departments and shall report to the

agency’s director<

(ii) the internal audit service shall verify that

procedures adopted by the agency are adequate to ensure

that compliance with Community rules is verified and

that the accounts are accurate, complete and timely.

Verifications may be limited to selected measures and

to samples of transactions provided that an audit plan

ensures that all significant areas, including the

departments responsible for authorisation, are covered

over a period not exceeding five years<

(iii) the service’s work shall be performed in

accordance with internationally accepted standards, shall

be recorded in working papers and shall result in reports

and recommendations addressed to the agency’s top

management.”< and

(c) in regulation (5) thereof, for the word

“Manager” wherever it occurs, there shall be substituted the

word “Head”.

Regulation 4 of the principal regulations shall be deleted.

Deletes regulation 4

of the principal

regulations.

Sub-regulation (2) of regulation 5 of the principal regulations Amends regulation

5 of the principal

shall be deleted and sub-regulation (1) thereof shall be renumbered as regulations.

the whole regulation.

Regulation 6 the principal regulations shall be deleted.

Deletes regulation 6

of the principal

regulations.

For regulation 7 of the principal regulations, there shall be Amends regulation

7 of the principal

substituted the following>

regulations.

“7.

The agency shall adopt the following procedures>

(a) the agency shall lay down detailed procedures for

the receipt, recording and processing of claims, including a

description of all documents to be used<

(b) each official responsible for authorisation shall have

at his disposal a detailed checklist of the verifications he is

required to undertake, and shall include in the supporting

documents of the claim his attestation that those checks have

been performed. That attestation may be made by electronic

means. There shall be evidence of review of the work by a

senior staff member<

(c) a claim shall be authorised for payment only after

sufficient checks have been made to verify that it complies

with Community rules. Those checks shall include those

required by the Regulation governing the specific measure

under which aid is claimed, and those required pursuant to

Article 9 of Regulation (EC) No 1290#2005 to prevent and

detect fraud and irregularity with particular regard to the risks

incurred. For the EAFRD there shall in addition be procedures

for verifying that the criteria for the granting of aid have been

respected and that all applicable Community rules have been

complied with<

(d) the management of the agency shall, at an

appropriate level, be informed on a regular and timely basis

of the results of controls carried out, so that the sufficiency of

those controls may always be taken into account before a claim

is settled<

(e) the work performed shall be described in detail in

a report accompanying each claim, batch of claims or, when

appropriate, in a report covering one marketing year. The

report shall be accompanied by an attestation of the eligibility

of the approved claims and of the nature, scope and limits of

the work done. For the EAFRD there shall in addition be an

assurance that the criteria for the granting of aid have been

respected and that all applicable Community rules have been

complied with. If any physical or administrative checks are

not exhaustive, but performed on a sample of claims, the

claims selected shall be identified, the sampling method

described, the results of all inspections and the measures taken

in respect of discrepancies and irregularities reported upon.

The supporting documents shall be sufficient to provide

assurance that all the required checks on the eligibility of the

authorised claims have been performed<

(f) where documents (in paper or electronic form)

relating to the claims authorised and controls effected are

retained by other bodies, both those bodies and the agency

shall set up procedures to ensure that the location of all such

documents that are relevant to specific payments made by

the agency is recorded.”.

For regulation 8 of the principal regulations there shall be Substitutes

regulation 8 of the

substituted the following>

principal

regulations.

“8. The Paying Agency shall adopt the necessary procedures

to ensure that payments are made only to bank accounts belonging

to either the claimant or to his assignee. The payment shall be

executed by the agency’s banker, or, as appropriate, a governmental

payments office, within five working days of the date of charge to

the EAGF or to the EAFRD. However, for the financial years 2007

and 2008 payments may also be made by payable order. Procedures

shall be adopted to ensure that all payments for which transfers

are not executed are re-credited to the Funds. No payments shall

be made in cash. The approval of the authorising official and, or

his supervisor may be made by electronic means, provided an

appropriate level of security over those means is ensured, and the

identity of the signatory is entered into the electronic records.”.

For regulation 9 of the principal regulations there shall be Substitutes

regulation 9 of the

substituted the following>

principal

regulations.

“9. Information systems security shall be based on the

criteria laid down in the version applicable in the financial year

concerned of one of the following internationally accepted

standards>

(a) International Standards Organisation 17799#British

Standard 7799> Code of practise for Information Security

Management (BS ISO#IEC 17799)<

(b) Bundesamt

f¸r

Sicherheit

in

der

Infomationstechnik> IT Grundschutzhandbuch#IT Baseline

Protection Manual (BSI)<

(c) Information Systems Audit and Control

Foundation> Control objectives for Information and related

Technology (COBIT).

The agency shall choose one of those international standards

as the basis for its information systems security. Security measures

should be adapted to the administrative structure, staffing and

technological environments of each individual paying agency. The

financial and technological effort should be in proportion to the

actual risks incurred.”.

Regulation 10 of the principal regulations shall be deleted.

Regulation 11 the principal regulations shall be deleted.

11.

For regulation 13 of the principal regulations, there shall be

substituted the following>

Any dispute arising from claims made to the Paying

“Applicability

L.N. 168 of Agency shall be regulated by the provisions of the Dispute

Resolution Board Regulations, 2007.

for dispute

resolution.

13. For Annex I to the principal regulations, there shall be

substituted the following>

“ANNEX I

(Regulation 13)

CRITERIA FOR THE ACCREDITATION OF THE PAYING

AGENCY

1 The competent authority shall consist of three or more members

responsible for audit within the EU Affairs of the Ministry responsible

for Agriculture appointed by the Minister responsible for rural affairs,

who shall appoint one of such members as chairman and shall be the

authority responsible for the granting or withdrawal of accreditation to

the Paying Agency.

2. (1) The accreditation of the Paying Agency shall be subject

to the authorisation of the Minister and the competent authority shall be

informed about such accreditation.

(2) In the exercise of its function to accredit the Paying

Agency, the competent authority shall ensure that the Paying Agency is

in compliance with the criteria established in Commission Regulation

No 885#2006 and such Guidelines as may be issued in respect thereof

by the organs of the European Union.

(3) In particular, the competent authority shall ensure that

the Paying Agency will comply with four basis areas> internal

environment, control activities, information and communication, and

monitoring as established in Annex 1 of EU Regulation No 885#2006

and that the Paying Agency has set up the proper systems for>

i.

the arrangements for the authorisation of claims,

ii. the arrangements for the execution of payments,

iii.

the safeguarding of the Community budget,

iv.

the security of the information system,

v. the maintenance of the accounting records, the division

of duties,

vi. the adequacy of internal and external controls insofar as

transactions financed by the European Agricultural Guarantee Fund

(EAGF) and European Agricultural Fund for Rural Development

(EAFRD) are concerned.

In respect of payments made by them and as regards

communicating and keeping information, provide sufficient guarantees

(a) the eligibility of requests and, in the framework of rural

development, the procedure for allocating aid, as well as their

compliance with Community rules are checked before payment is

authorised,

(b) accurate and exhaustive accounts are kept of the

payments made,

(c)

the checks laid down by Community legislation are

made,

(d) the requisite documents are presented within the time

limits and in the form stipulated by Community rules,

(e) the documents are accessible and kept in a manner which

ensures their completeness, validity and legibility over time,

including with regard to electronic documents within the meaning

of Community rules.

(4) The Head of the Paying Agency shall provide the

competent authority with the following documents to enable it to carry

out its functions>

i. A formal act in compliance with Paying Agency

(Amendment) Regulation 2007 that lays down the powers,

obligations and responsibilities and administrative structure of the

Paying Agency including all the manual of procedures referred to

each separate accounts for EAGF and EAFRD,

ii. All the Memoranda of Understandings (MoUs) regarding

the delegated functions in compliance with annex 1(c) of

Commission Regulation 885#2006 and such guideline. These MoUs

shall be signed by the Head of the Paying Agency and the respective

services to whom the tasks have been delegated as required by the

Commission guideline no 2,

iii. A written guarantee that the services of the Paying

Agency which have been delegated shall operate according to the

relevant parts of Commission Regulation 885#2006, in particular

with regards to the separation of functions, the use of check-lists,

written procedures and administrative controls and inspections,

iv. A written report on the administration and accounting

conditions and those adopted to protect the interests of the

Community with regards to payment of advances, guarantees

obtained, intervention stocks and the amounts due to the Guarantee

Fund of the EAGF and EAFRD,

v. The manual of procedure for access to the computer

system for the payment of claims which lays down that the access

to the computer system shall be protected and the passwords shall

be changed regularly to avoid misuse. The manual shall state that

the computer system shall be protected from unauthorized access

by physical controls and copies stored in a separate and safe location

and shall back up the data provided by the Office of Audit of the

Paying Agency, in compliance with such guidelines as may be

issued in respect thereof by the organs of the European Union,

vi. The measures, in written form, adopted so as to avoid

conflict of interest that may arise with regard to certain

responsibilities within the Paying Agency, in particular those

referring to the authorisation, execution of payments and accounting

for payments functions,

vii. The payments made by the Paying Agency are made

only to bank accounts belonging to either the claimant or to his

assignee. The payment system should guarantee that the payment

are executed by the agency’s banker, or, as appropriate a

governmental payments office within 5 working days of charge to

the EAGF or to EAFRD.

(5) In case article 17 of EU Regulation No 885#2006 shall

be applied, the Head of the Paying Agency shall provide the above

mentioned documents only for the new responsibilities by the 1 st October,

2007. (6) The competent authority also shall verify that all the

requirements of the Integrated Administrative Control system and the

accounting requirements are satisfactory particularly with regards to

the following requisites>

i. the computerised databases shall record the data obtained

from the aid applications for each agricultural holding to allow

direct and immediate consultation,

ii. Entitlements register linked with eligible area and IACS

administrative controls shall ensure that aid is calculated correctly

and that no duplicate payments are made,

iii. the identification of agricultural land shall be done either

by land registry maps or other cartographic references, aerial

photographs, satellite images, or other equivalent supporting

references,

iv. the competent authority shall verify that the Paying

Agency has the necessary human resources for the identification

and registration of animals, where such verification shall be based

on the quality of the basic data (alphanumerical system of

identification of agricultural land and registration and identification

of animals registers), the information available in the applications

and the type of computer programs,

v. the main role of the field inspectors shall verify that

holdings made by the farmers in their aid application are accurate

and the Paying Agency shall effect a number of field inspections,

in accordance with Commission Regulation 796#2004 of the 21st

April 2004,

vi. the rules for sanctions and reductions applied shall be

those established by IACS Regulation No 796#2004 concerning

the eligibility and the cross-compliance regime,

vii. the identity of each farmer who submits an aid

application subject to the integrated system is duly recorded,

viii. the creation of an accounting system that records all

the EAGF and EAFRD payments and provides for the recording

of overpayments in a ledger of the debtor thereby providing a

system for the effective collection of credit and the existence of a

certifying body as established by Article 5 of Commission

Regulation 885#2006.

ix. the verification on the Integrated System shall comprise

the existence of a computerised data base, an identification system

for agricultural parcels, a system for the identification and

registration of payment entitlements as referred to in Article 21 of

EU Regulation No 1782#2003, aid applications, an integrated

control system and a single system to record the identity of each

farmer who submits an aid application.

(7) The verification of the accounts systems should clearly

to ensure that the two Funds EAGF and EAFRD should be tested

separately, as the competent authority should have to provide an opinion

in respect of each set of account.

3. (1) The competent authority shall set the period within which

the above mentioned checks have to be fulfilled.

(2) The competent authority has a time limit of 60 days

within which to authorize the accreditation of the Paying Agency, which

shall commence from the day the Paying Agency first communicates

its interest in writing, to apply for accreditation.

(3) With reference to the above mentioned point 2(5), the

accreditation shall be carried only for these new responsibilities. The

accreditation by the competent authority shall be completed by 16

October 2007 and it should have to exclude the measures for which the

procedures have still to be put in place. For these measures an

accreditation should have to be provided later. The above terms

expenditure means expenditure for measures not accredited already

under EU Regulation No 1663#1995.

(4) The competent authority shall authorize the accreditation

provided that the Paying Agency complies with all the relevant

requirements through a specific report, which structure reporting has to

be in compliance with the Commission Guideline No 2.

(5) The competent authority shall be assisted by the “audit

body” defined as the accreditation Unit within the IAID to carry out the

tasks of the above mentioned accreditation criteria.

(6) The act of accreditation shall consist of a written

confirmation by the Ministry that the Paying Agency meets the criteria

for accreditation.

(7) The accreditation of the Paying Agency shall be

communicated to the European Commission.

4. (1) In the case where the competent authority that applied

for accreditation does not meet the criteria laid down in these regulations,

the competent authority may grant temporary accreditation to be

determined taking into account the severity of the problem identified,

which shall not exceed 12 months. The extension period may be granted

upon request by the competent authority to the Commission.

(2) Where the competent authority is not satisfied that the

competent authority complies with the above mentioned accreditation

criteria, it shall address instructions to the Paying Agency specifying

the conditions it is required to fulfil before accreditation may be granted.

The competent authority should set up a contingency plan in case the

accreditation would be withdrawn. If accreditation is withdrawn, the

competent authority shall without delay accredit another competent

authority in accordance with article 6(2) of EU Regulation No 1290#2005

and article 1 of EU Regulation No 885#2005.

5. The competent authority shall keep the paying agency for

which it is responsible under constant supervision, notably on the basis

of the certificates and report drawn up by the certification body under

the Paying Agency Regulation 2007. Every three years, the competent

authority shall inform the Commission in writing of the results of its

supervision and indicate whether the competent authority continue to

comply with the above mentioned accreditation criteria.

6. The Head of the Paying Agency and the Permanent Secretary

of the MRAE shall ensure that any information suggesting that the paying

agency not complying with the above mentioned accreditation criteria

is communicated to the competent authority within five working days.

7. Where the competent authority no longer respects or is

seriously deficient to fulfil the tasks set out in article 6(1) of EU

regulation No 1290#2005, the competent authority shall put the agency’s

accreditation under probation and draw up a plan remedy the deficiencies

found within a period to be determined according from the date on

which the accreditation is put under probation. The competent authority

shall inform the Commission of the above mentioned plan drawn and

of the implementation of such plan. During this period where those

deficiencies found by the competent authority have not been remedied,

the competent authority cannot affect payments related to the measures

concerned.”.

For Annex II to the principal regulations, there shall be

substituted the following>

“ANNEX II

(Regulation 14)

1. For the purposes of this Regulation, unless the context

otherwise requires, the following definitions shall apply>

‘Arable land’ means land cultivated for crop production and

land under set-aside, or maintained in good agricultural and

environmental condition in accordance with Article 5 of Regulation

(EC) No 1782#2003 irrespective of whether or not that land is under

greenhouses or under fixed or mobile cover<

‘Single application’ means the application for direct payments

in respect of the single payment scheme and other area related

direct or indirect aid schemes. The single application also includes

the Rural Development land-based measures and livestock

measures, aid for tomatoes for processing, additional aid for

potatoes, additional aid for Vine and restructuring aid for Wine<

‘Agricultural activity’ means the production, rearing or

growing of agricultural products including harvesting, milking,

breeding animals and keeping animals for farming purposes, or

maintaining the land in good agricultural and environmental

condition<

‘Irregularities’ means any non-respect of the relevant rules

for the granting of the aid in question<

‘Land Use’ means the use of area in terms of the type of crop

or ground cover or the absence of a crop, as referred to in the aid

scheme under the Act<

‘Area determined’ means the area for which all conditions

laid down in the rules for granting the aid have been met< in the

case of the single payment scheme, the area declared may be

deemed as being determined only if it is actually being accompanied

by a corresponding number of payment entitlements<

‘System for the identification and registration of bovine

animals’ means the system for the identification and registration

of bovine animals established by Regulation (EC) No 1760#2000

of the European Parliament and of the Council<

‘Beneficiary’ means the farmer, livestock breeders, agro-

processors and local action groups registered and coded in a unique

manner of identification and who applies for aid using the IACS

System<

‘Integrated Control System’ means the control system

covering the single application, in particular as regards

administrative checks, on-the-spot checks and, if appropriate,

verification by aerial or satellite remote-sensing<

‘Livestock’ means any living member of the animal kingdom,

to which any aid scheme designated by the Minister under point 4

of this annex applies<

‘Ear tag’ means the ear tag to identify animals individually

referred to in Articles 3(a) and 4 of Regulation (EC) No 1760#2000<

‘Computerised database for bovine animals’ means the

computerised database referred to in Articles 3(b) and 5 of

Regulation (EC) No 1760#2000<

‘Animal passport’ means the animal passport referred to in

Articles 3(c) and 6 of Regulation (EC) No 1760#2000<

‘Register’ means the register kept by the keepers of animals

in accordance with Article 4 of Council Directive 92#102#EEC(7),

with Article 5 of Council Regulation (EC) No 21#2004(8), or

Articles 3(d) and 7 of Regulation (EC) No 1760#2000 respectively<

‘Elements of the system for the identification and registration

of bovine animals’ means the elements referred to in Article 3 of

Regulation (EC) No 1760#2000<

‘Identification code’ means the identification code referred

to in Article 4(1) of Regulation (EC) No 1760#2000<

‘Animal keeper’ means any natural or legal person responsible

for animals whether on a permanent or on a temporary basis,

including during transportation or at a market<

‘Authorised person’ means any person, whether or not an

officer of the Paying Agency, who is authorised by the Paying

Agency, either generally or specifically, to act in matters arising

under these regulations<

‘Reference parcel’ means a geographically delimited area

retaining a unique identification as registered in the Land Parcel

Identification System (LPIS) and available in the IACS database,

which refers to an area of land on which more than one crop may

be raised by more than one farmer.<

‘Agricultural parcel’ means a continuous area of land on which

a single crop is raised by a single farmer<

‘Crop Group’ means in relation to the use of areas, means a

set of distinct parcels in the application that have the same relevant

cultivation for the purposes of the calculation of the financial

assistance under the relevant aid scheme designated by the Minister

under point 4 of this Annex<

‘Farmer’ means a natural or legal person, or a group of natural

or legal persons, who is responsible for agricultural parcels and#or

who breeds livestock in Malta<

‘Minister’ means the Minister responsible for the rural affairs<

‘Premium period’ means the period to which a single

application refers irrespective of the moment of its submission<

‘Geographical Information System’ (GIS) means the

computerised geographical information system techniques referred

to in Article 20 of Regulation (EC) No 1782#2003<

‘LPIS’ (Land Parcel Identification System) means a

Geographical Information System (GIS) which identifies reference

parcels, assigning to each of them a unique identification code

(reference parcel number)<

‘Holding’ means all the production units situated in Malta

managed by the same farmer<

‘Paying Agency’ means the Paying Agency established by

these regulations<

‘Cross-compliance’ means the statutory management

requirements and the good agricultural and environmental

conditions in accordance with Articles 4 and 5 of Regulation (EC)

No 1782#2003<

‘Areas of cross-compliance’ means the different areas of

statutory management requirements within the meaning of Article

4(1) of Regulation (EC) No 1782#2003 and the good agricultural

and environmental condition as stipulated in Annex IV to that

Regulation<

‘Standard’ means the standards as defined by the Member

States in accordance with Article 5 and Annex IV of Regulation

(EC) No 1782#2003<

‘Requirement’ means where this term is used in the context

of cross-compliance, it shall mean each individual statutory

management requirement resulting from any of the Articles referred

to in Annex III to Regulation (EC) No 1782#2003 within a given

act, differing in substance from any other requirements of the same

act<

‘Non-compliance’ means any non-compliance with the

requirements, obligations and standards set out in the statutory

management requirements and the good agricultural and

environmental conditions<

‘Specialised bodies’ means the national competent authorities

responsible delegated by the Paying Agency responsible in relation

to all requirements, standard, acts, or areas of cross compliance, in

accordance with the first subparagraph of Article 25(2) of

Regulation (EC) No 1782#2003, for ensuring compliance with the

statutory management requirements and good agricultural and

environmental condition<

‘Control Unit’ within the Paying Agency means the authority

responsible for coordinating the checks provided for Chapter IV

of Regulation (EC) No 1782#2003

‘Eligible hectares’ means any agricultural area of the holding

taken up by arable land and permanent pasture except areas under

permanent crops, forests or used for non agricultural activities.

2. The identity of applicants shall be established on the basis of

the identity card number in the case of individuals, and on the basis of

the VAT number in the case of companies.

3. (1) For the purposes of this annex a reference parcel shall

be identified on the basis of the reference number attributed to it in the

LPIS.

(2) There shall be no minimum size for a reference parcel

in respect of which a single application may be made.

4. The system for the identification and registration of animals

to be taken into account for the granting of aid governed by this annex

shall be such system as may be established under the provisions of the

Veterinary Services Act, and recognised by the Paying Agency for the

purpose of this Annex.

5. (1) In order to be eligible under one or more aid schemes

governed by this annex, a farmer shall submit, for each year, a single

application to the Paying Agency on such form as is made available to

farmers by the Paying Agency>

Provided that such application need not be submitted in

relation to such financial assistance as the Minister may by notice in

the Gazette exempt subject to any conditions, if any, attached to such

exemption by the terms of the relevant aid scheme.

(2) A farmer shall provide such supplementary

documentation as may be required by the Paying Agency for the

purposes of determining eligibility for financial assistance under the

relevant aid scheme.

(3) Single applications shall be submitted by the 15 th of May

of each year>

Provided that where such date falls on a Saturday, Sunday or

other public holiday, such date shall be deemed to be the first following

working day not being a Saturday>

Provided further that where a single application is submitted

electronically in accordance with sub-point (2) of point 7 of this Annex,

the time limit for receipt shall be 11.59 pm on the latest submission

date.

(4) A farmer shall declare the kind of use of area of all

agricultural parcels in all the reference parcels on the holding in the

single application in such manner as may be specified by the relevant

aid scheme<

Provided that the Minister may declare by Notice in the

Gazette that no declaration is to be made in respect of the use of area

for which a scheme is established by regulations made under the Act,

where such information is made available to the Paying Agency in the

framework of an administration and control system applicable to that

scheme which is compatible with the integrated administration and

control system established in this Annex.

(5) Subject to sub-point (7) hereof where this is permitted

by and made in accordance with the rules applicable to the aid scheme

concerned, after the expiry of the time limit for the submission of the

single application, a farmer may apply for individual agricultural parcels

not declared in the single application to be indicated and to have changes

regarding the use or aid scheme to be made to the single application.

(6) The addition of agricultural parcels and amendments in

accordance with sub-point (5) shall be notified to the Paying Agency in

writing by not later than the latest sowing date laid down in the relevant

aid scheme.

Provided that provisos to sub-point (3) hereof shall apply

mutatis mutandis in relation to the latest sowing date.

(7) Where the Paying Agency has already informed the

farmer of irregularities in the single application or where it has given

notice to the farmer of its intention to carry out an on-the-spot check as

referred to in point 14 of this Annex and where this on-the-spot check

reveals irregularities, additions and amendments in accordance with

sub-points (5) and (6) of this point may not be made in respect of the

agricultural parcels affected by the irregularities.

(8) The area corresponding to the number of eligible

hectares in respect of which a single payment application is submitted

may be the subject of an application for any other direct payment as

well as for any other area-related aid, save as otherwise provided.

6. (1) Farmers in the livestock sector shall apply for payment

entitlements subject to special conditions in the first year of

implementation of the single payment scheme. In order to be eligible

for such assistance a farmer must have been granted payments for

slaughter premium, special premium for male bovine animals and the

suckler cow premium and#or aids provided for under the sheep and

goats aid scheme, or must have been acting in one of the sectors

aforementioned prior to the first year of application of the single payment

scheme.

(2) Where a farmer does not have any land on which to

activate such entitlements, he shall be required that he maintains at least

50 % of the agricultural activity exercised before the transition to the

single payment scheme expressed in livestock units (LU).

(3) Where a farmer does not have any land on which to

activate such entitlements, he shall be required to he maintains at least

the agricultural activity during the period of the single payment scheme.

7. (1) Where the single application or any amendments to it is

required to be accompanied by supplementary documentation, under

rules governing the aid scheme or by the Paying Agency, such

documentation shall be considered part of the application.

(2) An aid application may be adjusted at any time after its

submission, in cases of obvious errors recognised by the competent

authority. The Paying Agency may accept to rectify the error and

thereupon the benefits to which the farmer may lawfully qualify under

the said aid application shall not be prejudiced if the Paying Agency is

satisfied that the error was made buona fide and was not due to gross

negligence on the part of the applicant.

(3) A farmer may apply to the Paying Agency at any time

for his aid application to be withdrawn in whole or in part, and in such

case the applicant farmer shall be put in the position he was in before he

submitted the aid application or the part thereof so withdrawn>

Provided that no withdrawal shall be allowed between the

time when the Paying Agency has given notice to the farmer of its

intention to carry out an on-the-spot check and the time when the spot

check is effectively carried out<

Provided further that no withdrawal shall be allowed in respect

of any part of the aid application where the Paying Agency has

discovered any irregularity in relation to such part after carrying out the

on-the-spot check .

8. (1) The Paying Agency shall keep and administer a

computerised database which shall contain all the data obtained from

the aid applications for aid schemes.

(2) The Paying Agency shall be responsible for the

processing of the data concerned, and for such purpose, the computerised

database shall be such so as to allow direct and immediate consultation

of the data, as available, relating at least to the previous three consecutive

years.

9. The Paying Agency shall be responsible for the setting up and

maintenance of the single integrated control system which is herein

established.

10. The Paying Agency shall carry out administrative checks on

every aid application received and every aid application shall be subject

to such verification and control as the Paying Agency may deem

necessary, and for such purpose the applicant shall allow the Paying

Agency or its lawful representative or delegate access to premises and

sites related to the application.

11. (1) The Paying Agency may delegate to any competent

person or specialised agency or firm such duties in relation to the carrying

out and co-ordination of checks to ensure effective verification of

compliance with the terms under which aid is granted in terms of this

annex.

(2) Notwithstanding any such delegation, the Paying

Agency shall retain control over and responsibility for such duties.

12. (1) On-the-spot checks shall be carried out by authorised

persons and shall cover a sample of agricultural holdings according to a

sampling plan drawn up for such purpose by the Paying Agency.

(2) Farmers in whose regard on-the-spot checks are to be

carried out shall be selected by the Paying Agency on the basis of a risk

analysis and in such manner that the sample selected shall represent a

fair cross-section of all forms.

(3) An application shall be rejected if the applicant or his

representative prevents or hinders an on-the-spot check from being

carried out.

(4) Every on-the-spot check shall be the subject of a control

report.

(5) Where the on-the-spot check reveals any irregularity the

applicant shall be given a copy of the control report. A copy of such

report shall also be given to the applicant if the irregularity is revealed

by remote sensing carried out in accordance with sub-point (4) of point

13.

13. (1) The measured area resulting from on-the-spot controls

shall be determined by such means as may be established by the Paying

Agency to be appropriate.

(2) Where certain landscape features, in particular hedges,

ditches and walls, are traditionally part of good agriculture cropping or

utilisation practices, the corresponding area is to be considered part of

the eligible area. The list of such landscape features shall be established

by the Paying Agency.

(3) The eligibility of agricultural parcels shall be verified

by such means as may be established as appropriate by the Paying

Agency and for such purpose the Paying Agency may require such

additional proof as it may consider necessary.

(4) On-the-spot checks in respect of area aid applications

may be carried out by way of remote sensing on all or part of the sample

referred to in sub-point (1) of point 12 to determine the area of

agricultural parcels and identify crops where necessary.

14. (1) The amount of the aid to be granted shall be calculated

according to the provisions of the aid schemes, subject to such reductions

and exclusions as are applicable thereto. The Paying Agency has the

responsibility for the fixing of reductions or exclusion in individual

cases in accordance with Chapter II of Tile IV of Regulation (EC) No

796#2004.

(2) Reductions or exclusions shall not apply>

(i) where the farmer can show that he submitted factually

correct information or where he proves that he has exercised all

due diligence in the submission of his application<

(ii) with regard to such parts of the aid application in respect

of which the farmer has informed the Paying Agency in writing

that the aid application is incorrect or has become incorrect since

it was submitted.

Notwithstanding the provisions of sub-point 2(i) above, the

application shall be adjusted to reflect the actual situation.

(3) In relation to the area-related applications, calculations

shall be made for crop groups, in the appropriate manner as may be

determined by the Paying Agency>

Provided that, if the area of a crop group determined is found

to be greater than that declared in the aid application, the area declared

shall be taken for calculation of the aid.

(4) Where environmental requirements, provided for under

any enactment containing environmental measures in relation to the

agricultural land used or production concerned, are not respected, such

reductions or cancellations of the benefits accruing from the relevant

aid schemes shall apply as provided under the Act or the regulations as

the case may be, containing the environmental measures.

(5) The value and number of the payment entitlements

allocated on the basis of the application submitted by the farmers in

2007 for the establishment of the payment entitlements in the first year

of application of the single payment scheme shall be provisional. The

definitive value and number shall be established, by 31 December

2007, to all active Maltese farmers in 2007 during the fist year of

application of the single payment scheme, after the checks made pursuant

to Commission Regulation (EC) No 796#2004 are carried out.

(6) The value of each payment entitlement shall be a unit

value and all the entire territory of Malta (including Gozo) shall be one

region for the purpose of article 58 of the Council Regulation No

1782#2003.

(7) The rules of Regulation (EC) No 795#2004 as regards

the controls procedures for the calculation of the unit value of payment

entitlements and the eligible hectares and use of the payment entitlements

shall apply mutatis mutandis.

(1) The Paying Agency will constitute a national reserve

for the purpose of allocating payment entitlements on the basis of 2007

applications, according to objective criteria, to dairy and livestock

farmers finding themselves in a special situation as a result of the

transition to the single payment scheme. It shall be utilized to allocate

entitlements to producers with or without land. The objective criteria

will be established according to the level of farming activity during a

reference period.

(2) The National Reserve shall also be used to ensure equal

treatment between livestock and dairy farmers and to avoid market and

competition distortion between these two groups of producers. The

measure shall be implemented as a top-up to the payment entitlements

to dairy farmers. The objective criteria will be determined according

to evidence of a potential loss of income to dairy farmers from the

introduction of the Single Payment Scheme in the first year of

implementation.

(3) The funding for these measures will be provided by the

maximum linear percentage reduction of the national

ceiling, supplemented by a linear reduction from the value of the land

based entitlements.

(1) Where a farmer has been unable to comply with his

obligations as a result of force majeure or any other exceptional

circumstance, he shall notify the Paying Agency in writing of the

occurrence of the force majeure or the exceptional circumstance within

ten days of the date on which the farmer is in a position to do so and in

the case of the death of a farmer such notification shall be made within

a reasonable time of the occurrence by the heirs.

(2) The notification in accordance with sub-point (1) hereof

shall be accompanied by such relevant information as the Paying Agency

may require.

(3) For the purposes of this point exceptional circumstances

shall include>

(a)

the death of the farmer<

(b) long-term professional incapacity of the farmer<

(c) a severe natural disaster gravely affecting the holding’s

agricultural land<

(d) the accidental destruction of livestock buildings on the

holding<

(e) an epizootic affecting part or all of the farmer’s livestock.

(1) If undue payment is made, the farmer shall upon

notification by the Paying Agency repay the amount unduly paid together

with interest calculated in accordance with sub-point (3) hereof.

(2) Recovery of the undue payment is to be made by

deduction of the amount unduly paid from any advances or payments

otherwise payable to the farmer following the date of the decision to

recover under such aid scheme as referred to in sub-point (4) hereof>

Provided that no such deduction shall be made if the farmer

has repaid the amount in question.

(3) Interest shall be charged at 6% and shall be calculated

for the period elapsing between the date of the notification of the

repayment obligation to the farmer and the date either of repayment or

of deduction as provided in sub-point (2) hereof.

(4) The repayment obligation referred to in sub-point (1)

hereof shall not apply if the payment was made through the error of the

Paying Agency itself or of another authority and if the error could not

reasonably have been detected by the farmer>

Provided that, where the error relates to factual elements

relevant to the calculation of the payment concerned, this sub-point

shall only apply if the decision to recover was not communicated within

twelve months of the payment.

(5) The repayment obligation referred to in sub-point (1)

hereof shall not apply if the period which elapsed between the date of

the payment of the aid and that of the first notification to the beneficiary

by the Paying Agency concerning the undue nature of the payment

concerned is more than ten years>

Provided that the period referred to in this sub-point shall be

limited to four years if the beneficiary acted in good faith.

(6) Amounts to be recovered as a consequence of the

application of reductions and exclusions referred to in sub-point (1) of

point 14 of these regulations shall be subject to a prescriptive period of

four years.

(7) The provisions of sub-point (4) and (5) hereof shall not

apply in the case of advances.

(1) For the purposes of this point>

(a) the “transfer of a holding” includes the sale, lease or

any similar transfer in respect of the production units concerned<

(b) “transferor” means the farmer whose holding is

transferred to another farmer<

(c) “transferee” means the farmer to whom the holding is

transferred.

(2) Where a holding is transferred in its entirety from one

farmer to another farmer after an aid application has been lodged and

before all the conditions for granting the aid have been fulfilled, no aid

shall be granted to the transferor in respect of the transferred holding.

(3) The aid applied for by the transferor shall be granted to

the transferee where>

(a) within ten working days from the date of the transfer

agreement the transferee notifies the Paying Agency of the transfer

and requests payment of the aid<

(b) the transferee presents such evidence as may be required

by the Paying Agency<

(c) all the conditions for granting the aid are fulfilled in

respect of the holding transferred.

(4) Once the transferee informs the Paying Agency of the

transfer of the holding and requests payment of the aid in accordance

with sub-point (3)(a) above and provided that the transferee produces

such evidence as may be required under sub-point (3) (b)>

(a) all rights and obligations of the transferor resulting from

the legal relationship between the transferor and the Paying Agency

generated by the aid application shall be transferred on the

transferee<

(b) all actions necessary for the granting of the aid and all

declarations made by the transferor prior to the transfer shall be

attributed to the transferee for the purpose of applying the relevant

rules<

(c) the holding transferred shall be considered, if the case

so requires, as a separate holding in respect of the marketing year

or premium period in question.

(5) Where an aid application is lodged after the actions

necessary for the granting of the aid have been performed and a holding

is transferred in its entirety from one farmer to another farmer after

those actions have started but before all the conditions for granting the

aid have been fulfilled, the aid may be granted to the transferee provided

the conditions in sub-point (3) (a) and (b) hereof are fulfilled. In which

case, sub-point (4) (b) above shall apply.

(6) The Paying Agency may decide, if the case so requires,

to grant the aid to the transferor, in which event>

(a)

no aid shall be granted to the transferee and

(b) the requirements set out in sub-points (2) to (5) hereof

shall apply mutatis mutandis.

Any information given or collected by virtue of this annex

shall be treated as confidential and shall not be disclosed except for the

purposes of this annex or as may be required under any other law where

provision is made for such disclosure.

(1) An authorised person may at any reasonable time and

on producing, if so required, a duly authenticated document showing

his authority, exercise the powers specified in this point for the purposes

(a) carrying out any check, test, verification, inspection,

control or other operation in relation to land and livestock required

under this annex, or

(b) ascertaining whether an irregularity under this annex

has been or is being committed.

(2) In the exercise of his powers as afore said, the authorised

person may enter -

(a) any slaughterhouse or any premises where loading

operations are carried out, and where animals are kept to which

any of the aid schemes may apply or where the authorised person

has reasonable cause to believe that such animals are kept, and

(b) any premises which are, or which are believed to be, in

the possession of a farmer, or employee or representative of a

farmer.

(3) An authorised person who has entered any premises by

virtue of this point may-

(a) inspect all or any part of the land farmed, laid fallow or

withdrawn from agricultural production by a farmer, and

(b) inspect any crops growing on that land or kept on it,

and

(c) inspect any of the animals to which any of the aid

schemes apply or may become applicable.

(4) An authorised person entering any premises by virtue

of this point may take with him such other person, as he considers

necessary or as may be required.

(5) Where the Paying Agency, in exercising its control over

any person or specialised agency or firm as referred to in sub-point (1)

of point 12, carries out any inspection or check, the official of the agency

carrying out such inspection or check shall be accompanied by an

authorised person.

(1) No person shall refuse entry to an authorised officer

exercising his power under point 19 of this annex.

(2) Any farmer or any employee or other person representing

such farmer shall during any inspection or verification, or at any such

time as may be required give to an authorised person all the assistance

and any information as the authorised person may reasonably require

so as to enable him to exercise his duties in relation to any power

conferred upon him by the point 19 of this annex.’.

Without prejudice to specific provision of this Regulation,

the rules of Regulation (EC) No 796#2004 and the rules of Regulation

(EC) No 1975#2006 as regards the implementation of control procedures

as well as cross-compliance in respect of rural development support

measures shall apply mutatis mutandis.

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press

Lm0.52 (€1.21)