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Part 1: General
1' all existing revenue sources of Municipal Council
Existing Revenue Sources of the Municipal Council Table 1 indicates all existing revenue sources of the Municipal Council together with applicable
legislation. Municipal Councils can generate revenues under each of the 25 sources given
hereunder.
Table 1 - All existing revenue sources of MC
Name of
Legislation
List of Revenue Sources
Under Municipal
Council Ordinance
Applicable Section Source of Revenue
Section 163 1. Court Fines
Section No 185 (2)
Schedule Number 02
(a)
2. Stamp Duties
3. All other charges levied by the
Council
Section 185(2) (d) 4. Sales
5. Lease of Shops
6. Lease of Lands
7. House and Official Quarters Rents
8. Interest
Section 155-158
Section (185) (2) (d)
(e)
9. Daily/Weekly Fair
10. Rents derived from letting Play
Grounds/Town Hall/Community
Halls
11. Public Service Charges
Section (185) (2)
(f)(g)
12. Grants allocated by decentralized
budgets
13. Grants allocated by Line Ministry
14. Provincial Council Criteria Based
Grants
15. Criteria Based Grants
Section (185) (2) (f)
(g)
16. Staff Salary reimbursements
17. Members fee reimbursements
Section 230 18. Rates
Section 245 to 246 19. Taxes levied on vehicles and
animals
Name of
Legislation
List of Revenue Sources
Section 185 (b)
Section 247 (b) (d) 20. Taxes levied on Business Premises
(Trade Tax on based on Annual
Value of the premises Schedule No
1)
Section 247 (c ) 21. Taxes levied on Business Turnover
– (Business Tax – Schedule No 11)
Section 247 (d) 22. Taxes levied on Bare Lands
Section 247 (e) 23. Taxes levied on Sale of some land
plots
Section 255 24. Recovery of costs on any warrants
issued.
25. Charges on seizure and removal of
goods seized.
26. Charges on keeping any goods
seized in safe custody.
27. When any sales take place of seized
movable properties 1% of the sale
value of the movable properties.
Under other main legislations
Entertainment Tax
Ordinance
Section 2 28. Entertainment Tax
The Butchers
Ordinance Section 11 29. Charges levied to inspect
slaughtered Animals
Licensing of Clubs
Act No 17 of 1975 Section 4 30. Licence fee
National
Environment Act no
47 of 1980
Orders imposed by
the Minister under
section 3
31. Environmental Licence fees
By-Laws enacted by
the council Applicable By-Law
to be read with
section number
247(a) of the MC
Ordinance
32. Issue of Trade Licences Schedule
No 111
33. Issue of Butchers Licence
34. Public Slaughter House – Exposure
of flesh of Animals
35. Public Slaughter House- Emergency
Permits to transport animals -
Name of
Legislation
List of Revenue Sources
36. Public Slaughter House-
Transportation of Meats
Mapping of Current Procedures and Practices
Revenue Source 01 – Court Fines
a. A Municipal Magistrate shall hear, try, and determine any offences committed within the
Municipality under this Ordinance or under any by-laws, rules or regulations made there
under, and also any offences under any of the enactments specified under section 163 of
the Municipal Ordinance. All money recovered as Court Fines should be remitted to the
Municipal Fund, and to be utilized as per the directions given under section 188 of the
MC Ordinance.
b. Legal requirements
MC Ordinance
Section 163
Section 185 (b)
c. Procedures and Practices
Key Steps Key Activities Remarks
i. Assessment and recovery of Court
Fines remitted to
the Provincial
Commissioner of
Revenue on behalf
of the MC
i. Identify the Municipal
Magistrate appointed by
the Judiciary Service
Commission for the MC
Jurisdiction. ii. Council to obtain a
schedule of the Court
Fines imposed on
offences committed on
monthly basis from the
courts, within the
jurisdiction under
section 163
iii. Council to prepare a
schedule of fines
receivable.
iv. Council to submit the
schedule to the
provincial commissioner
of revenue for
reimbursement.
v. Council to maintain a
register for “Court
Fines” to reconcile the
amount
receivable/received from
the Provincial
Commissioner of
Revenue.
Revenue Source 02– Stamp Duty
a. Municipal Council can recover all Stamp Duties accorded to the Council as per the
Second Schedule of the MC Ordinance. All such revenue should be remitted to the
“Municipal Fund” and to be utilized as per the directions given under section 188 of the
MC Ordinance.
b. Legal requirements
MC Ordinance
Section 185 (2) (c)
Second Schedule
c. Procedures and Practices
Key Steps Key Activities Remarks
i. Identify the offices of
the Land Registrar
assigned to register
the property deeds
for the council area.
i. Identify the additional
district registrar’s
office within the
jurisdiction of the
council.
ii. Identify the District
registrar’s office for
the jurisdiction of the
council
Deeds could
be registered
in any one of
these offices
within the
jurisdiction of
the council.
ii. Identify the lands
registered in these
offices
i. Visit the above offices
at least once in two
weeks and inspect the
registration schedules.
ii. Identify the lands
registered within the
jurisdiction of the
council
iii. Record the
information and the
stamp duties
applicable to each
property register
iii. Request for the
stamp duty
receivable by the
council.
i. Prepare a schedule of
stamp duty receivable
by the council.
ii. Obtain a confirmation
from the registrar of
lands
iii. Submit the schedule
confirmed by the
registrar of lands to
the Provincial
Commissioner of
Revenue for
reimbursement.
Revenue Source 03– All other Charges Levied by the Council
a. Municipal Council can recover all Stamps other Charges accorded to the Council as per
the Second Schedule of the MC Ordinance. All such revenue should be remitted to the
“Municipal Fund” and to be utilized as per the directions given under section 188 of the
MC Ordinance.
b. Legal requirements
MC Ordinance
Section 185 (2) (d)
Second Schedule – (3) and (4)
Procedures and Practices
Key Steps Key Activities Remarks
i. Assessment of
revenues
receivable
i. Obtain a list of
names of the
lawyers practicing
the profession
within the
jurisdiction of the
council and the
information on the
stamp duties paid
during the year on
annual basis (at the
end of each year)
from the registrar of
the courts as per
section 40 of
Judicature Act. ii. Obtain the list of
license holders
under the Notaries
Ordinance practice
within the
jurisdiction of the
council from the
Sectary, Ministry of
Home Affairs.
iii. Obtain a names of
the auditors
registered within
the jurisdiction
from the Provincial
registrar of
Companies.
Request for stamp duties
receivable under other
Acts and Ordinances.
i. As per above
information prepare
a list of stamp
duties receivable
from each
institution
ii. Forward the
schedule to the
assistant secretary
of the treasury for
reimbursement
Revenue Source 04 – Sales
a. Municipal Council can generate additional revenue by sale or lease of items belonging to
the council E.g.; Discarded items, old newspapers, produce from home gardens, compost
produced by the council, sale of recycle items collected by the council etc.
b. Legal requirements
MC Ordinance
Section 185 (2) (d)
c. Procedures and Practices
Key Steps Key Activities Remarks
i. Identification of items to
be sold by the council
i. Conduct an annual
survey to identify the
items that are usable,
discarded and written
off.
ii. Submit the schedule
of items to the Board
of Sale for initial
authorization
Key Steps Key Activities Remarks
ii. Sale of items iii. Appoint a suitable
person to carry out the
valuation iv. Obtain the council
approval. v. Decide the mode to
advertise the sale E.g.-
Newspaper
advertisement,
handbills, notice board
etc. vi. Set the lowest bid and
sell the items by
tenders/auctions any
other method
approved by the
council.
Revenue Source 05 – Lease of Shops
a. Municipal Council can generate additional revenue by lease of shops belonging to the
council
b. Legal requirement
MC Ordinance
Section 185 (2) (d)
c. Procedures and Practices
Key Steps Key Activities Remarks
i. Calling for Tenders
at the initial leasing
of shops
i. Allocation of Shops for
trading purposes. ii. Prepare Tender Notice
and Draft copy of
Agreement iii. Obtain Council
Approval for Tender
notice and Draft
Agreement
Key Steps Key Activities Remarks
iv. Publish Tender Notice
v. Award the Tender
vi. Obtain a by way of cash
or Bank draft
vii. Sign the agreement
viii. Hand over the
Keys to the tenants
ii. Collection of Rents i. Collect Rents on
Monthly basis.
ii. When the rent is in
default add a 10%
surcharge
iii. If the rent is in arrears
for more than 4 months
take steps to acquire
movable property
iii Extending the
agreement at a latter period
of time
i. Carry out a rent
assessment two months
in advance before the
date of expiry of the
current rent agreement
ii. Revise rent according to
the new assessment in
the new agreement
iii. Obtain a 6 months’ rent
(revised) as a deposit by
way of cash or Bank
draft
iv. Charge rent in arrears (if
there are any)
v. Revenue the agreement
at the end of the period
iv Charge rent according
to the new agreement i. As per number 2 above
from the day the new
agreement is come into
effect.
Key Steps Key Activities Remarks
V Approval of ownership
to operate the Shop as per
agreement.
i. Confirm the identity of
the shop owner once a
month
ii. If the shop is sub-let
notify the owner the
cancellation of
agreement
iii. If the tenant does not
adhered to the notice
take steps to seal the
shop
iv. Follow steps as per
initial renting of shops
when the acquired shops
are rented to new
tenants.
This investigation
will be a duty of
Revenue
Inspector/Revenue
supervisor or if
there is any officer
in charge of
managing the
shops
a. Sources of Income 5 - Renting Market Stalls on Long Term Lease. Municipal Council can generate revenue by constructing Public Market Buildings and
renting market stalls on monthly rental basis. This additional revenue is to be utilized
to provide public utility services for citizens.
b. Legal requirements
Municipal Councils can generate revenue by renting Market Stalls under section 40(1)
(u) (iv) of the Ordinance. When the market stalls are given on rents the council should
enter into an agreement under Common Law to charge rentals on monthly basis.
c. Procedures and Practices
Key Steps Key Activities Remarks
1. Calling for Tenders at
the initial leasing of
shops,
i' Allocation of Shops
for trading
purposes.
ii' Prepare Tender
Notice and Draft
copy of Agreement
iii' Obtain Council
Approval for Tender
notice and Draft
Agreement
iv' Publish Tender
Notice
v' Award the Tender
vi' Obtain a 6 months’
rent as a deposit by
way of cash or
Bank draft
vii' Sign the agreement
viii' Hand over the Keys
to the tenants
2. Collection of Rents i' Collect Rents on
Monthly basis.
ii' When the rent is in
default add a 10%
surcharge
iii' If the rent is in
arrears for more
than 4 months take
steps to acquire
movable property
3. Extending the
agreement at a latter
period of time
i' Carry out a rent
assessment two
months in advance
before the date of
expiry of the
current rent
agreement
ii' Revise rent
according to the
new assessment in
the new agreement
iii' Obtain a 6 months’
rent (revised) as a
deposit by way of
cash or Bank draft
iv' Charge rent in
arrears (if there are
any)
v' Revenue the
agreement at the
end of the period
4. Charge rent
according to the new
agreement
i' As per number 2
above from the day
the new agreement
is come into effect.
5. Approval of
ownership to operate
the Shop as per
agreement.
i' Confirm the
identity of the shop
owner once a
month
ii' If the shop is sub-
let notify the owner
the cancellation of
agreement
iii' If the tenant does
not adhered to the
notice take steps to
seal the shop
iv' Follow steps as per
initial renting of
shops when the
acquired shops are
rented to new
tenants.
This investigation
will be a duty of
Revenue
Inspector/Revenue
supervisor or if
there is any officer
in charge of
managing the
shops
Source of Income - Renting Market Stalls (Meat Stalls) on Annual Basis (By
Tenders)
a. The Council can generate revenue by constructing Meat Stalls and renting these stalls on
monthly rental basis. This additional revenue is to be utilized to provide public utility
services for citizens.
b. Legal Requirement
Municipal Councils can generate revenue on the above basis under section 40(1) (u) of
the Ordinance. When the market stalls are given on rents the council should enter into an
agreement under Common Law to charge rentals on monthly basis.
c. Procedures and Practices
Key Steps Key Activities Remarks
1' Call for Tenders i' Decide the lowest bid.
ii' Draft the agreement and
Tender notice
iii' Obtain council approval for
agreement and tender
notice
iv' Call for Tenders
v' Evaluate the Tenders
vi' Obtain Council Approval
vii' Award the Tender
viii' Obtain a 6 months’ rent as
a deposit by way of cash or
Bank draft
vii' Sign the agreement
viii' Hand over the Keys to the
tenants
2' Collection of Rents i' Collect Rents on Monthly
basis.
ii' If the rent is in arrears take
steps to acquire movable
property or seal the shops
Revenue Source 06– Lease of Lands
a. Municipal Council can generate additional revenue by lease of lands belonging to the
council. This additional revenue should be deposited in the Municipal Fund account and
utilize for the purposes prescribed as per section number 188 of the MC Ordinance.
b. Legal requirement
MC Ordinance
Section 185 (2) (d)
c. Procedures and Practices
Key Steps Key Activities Remarks
1. Calling for Tenders
at the initial leasing
of shops
i. Allocation of lands
available in the council
area that could be given
on lease ii. Prepare Tender Notice
and Draft copy of
Agreement iii. Obtain Council
Approval for Tender
notice and Draft
Agreement iv. Publish Tender Notice
v. Award the Tender
vi. Obtain a by way of cash
or Bank draft
vii. Sign the agreement and
hand over the tenancy.
2. Collection of Rents i. Collect Rents on
Monthly basis.
ii. When the rent is in
default add a 10%
surcharge
iii. If the rent is in arrears
for more than 4 months
take steps to acquire
movable property
3. Extending the
agreement at a latter
period of time
i. Carry out a rent
assessment two
months in advance
before the date of
expiry of the current
rent agreement
Key Steps Key Activities Remarks
ii. Revise rent
according to the new
assessment in the
new agreement
iii. Obtain a 6 months’
rent (revised) as a
deposit by way of
cash or Bank draft
iv. Charge rent in
arrears (if there are
any)
v. Revenue the
agreement at the end
of the period
4. Charge rent according
to the new agreement
i. As per number 2
above from the day
the new agreement
is come into effect.
5. Approval of ownership
to operate the Shop as
per agreement.
i. Confirm the identity of
the shop owner once a
month
ii. If the shop is sub-let
notify the owner the
cancellation of
agreement
iii. If the tenant does not
adhered to the notice
take steps to seal the
shop
iv. Follow steps as per
initial renting of shops
when the acquired shops
are rented to new
tenants.
This investigation
will be a duty of
Revenue
Inspector/Revenue
supervisor or if
there is any officer
in charge of
managing the
shops
Revenue Source 07– Houses and Official Quarters Rents
a. Municipal Council can generate revenue by renting the houses and official quarters
belonging to the council. Revenue generated through rents should be deposited in the
Municipal Fund Account and utilize in accordance with section 188 of the MC
Ordinance.
b. Legal requirement MC Ordinance
Section 185 (2) (d)
c. Procedures and Practices
Key Steps Key Activities Remarks
1. Identify the
officers who are
entitle to official
quarters
i. Prepare a internal policy
applicable for official
quarters
ii. Inform the occupant that
the council is ready to
handover the official
quarters as per the
council policy.
2. Handing over of
the official
quarters and
charging the
monthly rentals.
i. Enter into a rent
agreement before
tenancy
ii. Handover the
quarters to the
occupant
iii. Charge rents from
the monthly salary of
the officer.
Revenue Source 08– Interest
a. Municipal Councils can invest funds in Banks or Other Financial Institutions and
generate interest on such investments. These interests could be collected on quarterly or
on annual basis. Revenue generated through interest should be deposited in the Municipal
Fund Account and utilize as per the directions given under section 188 of MC Ordinance.
b. Legal requirement MC Ordinance
Section 185 (2) (d)
c. Procedures and Practices
No specific procedure or practice, but will be based on the standard accounting principles
and practices.
Revenue Source 09– Daily/Weekly Fair
a. Municipal Councils may from time to time, as occasions requires, provide places within
the Municipality for the purpose of being used as public markets, and may charge such
rents, tolls and fees as to it may seen fit for use of, or the right to expose goods for sale in,
such markets and for the use of shops stalls sheds, pens, and standing therein. Revenue
generated through interest should be deposited in the Municipal Fund Account and utilize
as per the directions given under the section 188 of the MC Ordinance.
b. Legal requirement MC Ordinance
Section 185 (2) (d)
c. Procedures and Practices
Key Steps Key Activities Remarks
1. Council to decide
the method of
collecting the
revenue from the
daily/weekly fair
i. Council to decide the
policy of charging the
rents i.e. through the
council officers, or
tender and collecting the
lease rents
ii. Decide the rents charged
for shops, stalls, pens
and standing therein.
If the council revenue officers are collecting rents assign them on daily basis to
collect the rents.
2. If tender system is
used call for
tenders
i. Decide the minimum
bid.
Revenue Source 10– Rents derived from letting Play Grounds/Town Hall/Community Halls
a. Municipal Councils may from time to time, as occasions require can hire play grounds,
town halls and community halls for temporary occupancy. Revenue generated through
these processes should be deposited in the Municipal Fund Account and utilize as per the
directions given under the section 188 of the MC Ordinance.
b. Legal requirement MC Ordinance
Section 185 (2) (d)
c. Procedures and Practices
Key Steps Key Activities Remarks
1. Decide the rents
charged.
i. Calculate the rents
based on usage of
water, electricity and
cleaning and
maintenance of the
premises that will be
hired on temporary
basis.
ii. Calculate the
charges on extra
hours for water and
electricity. Consider
the overtime payable
to workers for the
additional hours.
iii. Add extra 5% to the
base rate calculated
on the above and
decide on the rents
chargeable from the
occupants iv. Calculate the extra
hourly charges and
add another 5% to
the base rate for the
extra hour charges.
v. Make a council
decision on the rents
charged based on the
above calculations.
2. Premises given on rent i. Identify an officer in
charge of allocating the
premises.
ii. When the premises are
allocated charge the
rents accordingly
Revenue Source 11– Public Service Charges
a. Municipal Council can generate additional revenue by providing services on a fee basis
to the public. These fees are collected for the services provided at personal levels by the
Council. The fees charged for services such a s clearing of blocked drains and drainage,
removal of branches and other parts of trees cut down on the roads by persons, providing
services of crematoriums, hiring of heavy equipment owned by the council are some of
the examples. Revenue received from such services should be deposited in the Municipal
Fund and utilize according to section 188 of the MC Ordinance.
b. Legal requirement MC Ordinance
Section 185 (2) (d)
c. Procedures and Practices
Key Steps Key Activities Remarks
1. Identify the
services provided
by the council
i. Identify the
machinery/gully
bowsers/crematoriums
that are owned by the
council and the other
series provided.
ii. Calculate the rates
based on the system
provided in section 10
above
Clearing of blocked
drains and drainages,
removal of brancyes
and other parts of
trees cutdown on the
roads by persons
providing services of
crematoriums,
hiring of heavy
equipment owned by
councils etc
2. Service Delivery i. Charge for the services
as per section 10 above
Revenue Source 12, 13, 14, & 15
Grants allocated by decentralized budgets
Grants allocated by Line Ministry
Provincial Council Criteria Based Grants
Criteria Based Grants
a. These funds are received from external sources by the council from time to time for
development activities and improvement of service delivery of the council. Therefore the
council cannot assess or decide in advance the revenue receivable under these sources.
b. Legal requirement
MC Ordinance
Section 185 (2) (g)
c. Procedures and Practices cannot be decided as per the above.
Revenue Source 16 & 17
Staff Salary reimbursements
Members fee reimbursements
a. Municipal Councils receive grants from the Provincial Ministry of Local Government for
reimbursement of salaries and members’ allowances. The percentage of reimbursement
(100% or lesser percentage) and the conditions applicable for reimbursement is decided
by the Provincial Minister from time to time and directions will be given to the Provincial
Commissioners’ of Local Government to act accordingly.
b. Legal requirement MC Ordinance
Section 185 (2) (d)
c. Procedures and Practices
Key Steps Key Activities Remarks
1. Prepare the annual
Budgets and
estimates
i. Identify the cadre and
the Salary payable
together with the
proposed increments for
the budgeted year.
ii. Calculate the amount
payable to the elected
representatives for the
budgeted year
2. Submit the
statements for
reimbursement
i. Calculate the actual
payments on
monthly basis
ii. Submit the statement
to the Provincial
Commissioner of
Local Govt for
reimbursement
Revenue Source 18 - Assessment Rates
a. A certain percentage of the annual value of the lands and buildings situated within
the area of Local Authority is collected as Assessment Rates. This revenue is utilized
to maintain common services delivered to the citizens. The councils may impose a
higher rate on premises used for business or commercial purposes. Council may with
the sanction of the Minister, impose different rates for different areas or parts of the
Municipality according to the services provided by Council for each such area or part.
The council is compelled to provide services even to the unauthorised constructions
and these costs are not being reimbursed by such service recipients as they do not pay
assessment rates. These costs are therefore recovered from the other rate payers. Due
to this reason it can be concluded that there is no uniformity in charging taxes by the
councils and this situation is unavoidable.
As per the powers given under section 230 subsection (1) the Municipal from time to
time so often as it thinks necessary, make and assess, with the sanction of the
Minister, any rate or rates on the annual value of all houses and buildings of every
description and of all lands and tenements whatsoever within the Municipality. Please
refer sections 230-244 of the Municipality Ordinance
The powers to recover the rates and taxes are given under clauses 252 to 264 (a). It
shall be the duty of the Commissioner to issue a warrant signed by him to recover
rates and taxes.
The Assessment rates should be charged annually and council approval should be
obtained prior to charging the annual rates. When the assessment rates are imposed it
is necessary to accept the preceding year assessment to impose the succeeding year
assessment.
b. Legal Requirement
MC Ordinance
Section 230
c. Procedures and Practices
Key Steps Key Activities Remarks
1' Assessment of
Property Tax i' Council decision
ii' Minister’s approval
iii' Assess property
iv' Obtain council approval for
new assessments
v' Decide the new percentage
of increase based on the
new assessment and
expenditure
vi' Issue assessment notices
vii' Call for objections
viii' Review the objections
2' Annual Assessment
Taxes i' Council decisions
ii' Gazette notification
iii' Issue assessment notices
iv' Call for objections
v' Review the objections
3' Collection of
Assessment Taxes i' Payment at the Cashier’s
desk in the Council
ii' Through revenue
inspector/revenue
supervisor
iii' Issue of Warrant of Distress
against defaulters
iv' Acquiring property
v' Sale of Acquired property
vi' Acquire immovable
property
vii' Sale or transfer ownership
of acquired property
Revenue Source 19 - Taxes levied on vehicles and animals
a. As per section 245-246 in the Municipal Council Ordinance, annual taxes on vehicles
other than Motor Coaches are collected by the Council. Carts- hand carts and bicycles
and animals such as elephants, horses and dogs are also included in this class. In addition
to the receipt, a licence plate is also issued on payment and this plate should be fixed or
hung on the vehicle or animal’s neck. The Council has the power to take into taken into
custody the animals and release them after recovering the tax and the cost of taking them
into custody for non payment of tax. If the relevant taxes and costs are not paid when the
dogs are taken into custody, Council also has the power to destroy such animals.
b. Legal requirement MC Ordinance
4' Revision of
Assessment Tax
based on physical
changes done to the
property.
i' Annual verification
ii' Revise assessment taxes
based on physical changes
done to the property
iii' Issue assessment notices
iv' Call for objections
v' Review the objections
5' Certificate of
Conformity (CoC) for
new constructions
i' Forward the CoC to
Assessment Tax division.
ii' Revise the annual value of
the new property
iii' Issue assessment notices
iv' Call for objections
v' Review the objections
6' Removal of
unauthorized
constructions or grant
approval
i' Identify unauthorized
constructions in the area
7' Increase in annual
value of property due
to accelerated
development in an
area.
Follow step 4
Section 185 (2) (a) and (b)
Section 245 to246
c. Procedures and Practices
Key Steps Key Activities Remarks
Assessment of vehicles
(excluding motor
vehicles) and animals
that are subject to tax
within the council
area
Carryout an annual survey to
assess the vehicles and animals
that are subject to tax
Imposing the tax Prepare a resoulution for
the council
Submit the resolution to
the standing committee
for finance in the council
Submit the resolution
together with the finance
committee report for
council approval
Publish the Gazette
notice
Issue the gazette notice
to the relevant officers in
the council
Collection of tax
Forward the tax notices
to the relevant payers
Collect taxes
Revenue Source 20 - Taxes levied on Business Premises (Trade Tax based on annual value
of the premises
a. Local Authorities have the power to collect an annual tax from industries, trades and
businesses premises within their areas of authority. Such taxes may be collected for the
purposes stated in the by-laws framed under the provisions in the Act and subject to
limits stipulated in those by-laws. This tax is charged on the annual value of such
premises falls within the limits of any item stipulated in Column I and II in section 247
(A) of the Ordinance.
b. Legal requirement MC Ordinance
Section 247A
Section 185 (2) (a)
c. Procedures and Practices
Key Steps Key Activities Remarks
1' Assessment of Tax
levied on annual
value of Business
Premises
i. Carry out a survey to
identify the business
premises within the
council area
ii. Determine the annual
value of the business
premises.
Tax based on the
annual value of
the business
premises.
Maximum Tax
levied is LKR
5000/- refer
schedule 1 for list
of trades that are
subject to trade
tax
2' Collection of Tax i' Forward Tax notices
calculated based on the
directions provided in
Section 247 A Column I
and II
ii' Identify defaulters
iii' Seek Legal Action against
defaulters
Revenue Source 21- Business Tax
a. Municipal Council has the power to collect an annual tax from businesses, other than
industries which needs to obtain licence under section 247(a) or industries subject to
tax under section number 247(b)
Professional services and other service providers are categorised under this section.
Nevertheless as per the Municipal Council Ordinance section number 247 (c)
subsections (1a), there is no maximum sealing of the tax to be charged from the
Professionals is imposed by the Minister therefore this tax cannot be recovered from
the professionals. Other than professional services all other businesses are subject to
this tax. The tax rate for such businesses can be levied based on the past turnover. As
per clause number 247 (c ) the business tax levied should not exceed the annual value
of the premises on which that the trade is carried on; and the tax should fall within the
limits set out in Column 11 of the section 247 (c ). The tax should be imposed annually
and the last date of payment will be decided by the council.
b. MC Ordinance
Section 247 (a) and (b)
Section 185 (2) (a)
c. Procedures and Practices
Key Steps Key Activities Remarks
1' Assessment of
Business Tax
i' Carry out a survey
ii' Draft the proposal
iii' Obtain Council Approval
iv' Issue Gazette Notice
Maximum Tax
chargable is LKR
3000
Refer schedule 11
for list of
businesses that are
subject to business
tax
2' Collection of
Business Tax i' Forward Tax notices
ii' Identify defaulters
iii' Seek Legal Action against
defaulters
Revenue Source 22 - Tax on Undeveloped Land
a. Tax on undeveloped Land is identified as a compulsory tax that should be imposed by
the council. This is the only self generated revenue source of the council that has been
identified as compulsorily imposed. Such properties will not contribute positively to
the local economy. The council has born the costs of providing services for
undeveloped lands too and these costs will otherwise be borne by the rate payers.
Therefore to minimize the loss to the council tax it is compulsory to impose taxes on
undeveloped lands.
To identify the annual rate to be charged on undeveloped land the council will decide
the proportion of land that the extent of such land which is actually covered by
buildings bears to the total extent of such land, a proportion less than that prescribed
by the council resolution.
b. Legal Requirements
MC Ordinance
Section 247(b)
c. Procedures and Practices
Key Steps Key Activities Remarks
1' Assessment of tax on
undeveloped land i' Carry out a survey
ii' Draft the proposal
iii' Obtain Council Approval
iv' Issue Gazette Notice
2' Collection of tax i' Forward Tax notices
ii' Identify defaulters
iii' Seek legal against
defaulters to recover the
arrears.
Maximum 2% tax
could be levied on
annual value of
bare lands
Revenue Source 23 - Taxes levied on Sale of some land plots
a. Local Authorities have the power to collect taxes on any land within the administrative
limits of the sold by public auction or otherwise, by an auctioneer or brokers or his
servant or agent, the vendor or such auctioneer or broker or his servant or agent shall pay
to the Council, from the proceeds of the sale of such land a tax equivalent to 1% of the
amount of such proceeds.
b. Legal requirement MC Ordinance
Section 247 (e)
c. Procedures and Practices
Key Steps Key Activities Remarks
1. Identify the
lands sold by
auctioneers or
brokers
i. Identify the
auctioneers or
brokers through the
advertisements
published to sell the
lands within the
jurisdiction of the
council.
ii. Identify the
auctioneer or broker
through the
applications
submitted to the
council to erect
notice boards,
banners and other
advertising materials.
iii. Identify the
auctioneer or broker
through the
applications received
by the council for
division of land into
several blocks. (Land
plots)
Maximum tax 1%
of the sale
proceeds.
2. Charge tax on
land sold by
the auctioneer
or broker.
i. Obtain information
about the land sold
by auctioneer or
broker along with the
other information
obtained regarding
the stamp fees ii. Forward a tax notice
for 1% of the value
of the land sold from
the auctioneer or
broker.
iii. Inform the
magistrate about
defaluters.,
Revenue Source 24 - Recovery of costs on any warrants issued.
a. Local Authorities are entitled to recover the costs incurred in relation to the warrants
issued by the councils to collect the arrears of assessment rates. This fee should not
exceed the 10% of the value of the rates payable or 15% on the amount of rate due on
bare lands or 20% on the amount of rate due on properties other than bare lands and
residential premises.
b. Legal requirement MC Ordinance
Section 255 (a)
c. Procedures and Practices
Councils can recover this revenue from defaulters of assessment taxes. The Municipal
Commissioner/UC Secretary has to issue the Warrant and based on the amounts in
arrears the revenue will be calculated.
Revenue Source 25 - Charges on seizure and removal of goods seized.
a. Local Authority can recover the costs incurred for seizure and removal of goods seized,
in case such removal takes place, a charge not exceeding five cents for every fifty cents
of rate or tax or rent due
b. Legal requirement MC Ordinance
Section 255 (b)
Revenue Source 26 - Charges on keeping any goods seized in safe custody.
a. Local Authority can recover costs incurred for keeping any goods seized in safe custody
in case of detention, a charge not exceeding Rs.75/- per day
b. Legal requirement MC Ordinance
Section 255 (c)
Revenue Source 27 - When any sales take place of seized movable properties 1% of the
sale value of the movable properties.
a. Local Authority can recover the expense of sale, when any sale takes place a charge bot
exceeding 1% if the sale value of movable properties.
b. Legal requirement MC Ordinance
Section 185 (2) (d)
Revenue Source 28 - Entertainment Tax
a. Local Authorities collect these taxes under the provisions of the Entertainment Tax
Ordinance. This tax is imposed according to the value of the tickets issued for entering
the place of entertainment. Generally 10% of the value of tickets issued in cinemas,
theatres, entertainment centres, entertainment programmes or shows organized by
individuals is collected as tax. This tax should be settled within a month from the date of
the programme or the show and failure to do so will result in litigation. Generally for this
type of activities a security deposit will be obtained.
b. Legal requirement For MC & UC
Entertainment Tax Ordinance – Section 2
c. Procedures and Practices
Key Steps Key Activities Remarks
1. Impose
Entertainment tax
i. Council decision on
Entertainment Tax
ii. Obtain approval from
the Provincial Minister
of Local Government
iii. On approval of the
Council decision by the
Provincial Minister,
issue a gazette
notification under the
Minister’s name
2. Charge tax from
Cinema Hall
Owners(using the
label system)
i. Call for all the ticket
books from the Cinema
in advance and label on
tickets.
ii. Charge the Cinema hall
owner according to the
value of the labels.
iii. Inspect the cinema hall
while the shows are on,
to check whether there
are any other type of
tickets are sold.
3. Charge tax from
Cinema Hall
Owners(using a
Council Seal)
i. Call for all ticket books
from Cinema Hall in
advance and place the
council seal on tickets
ii. Inspect the cinema hall
while the shows are on
to ensure that there are
no other type of tickets
are being sold
iii. Assess the number of
tickets sold on daily
basis
iv. Compare the above
records with the records
submitted by the Cinema
hall owner to the
National Film
Corporation
v. Charge for the taxes at
the end of each month
based on the number of
tickets sold.
4. Charge tax on
other shows
i. Use the label system as
above and pay the tax to
the council in advance.
Revenue Source 29 - Charges levied to inspect slaughtered Animals
a. The trade of butcher, had to be carried out only on a licence (annual or temporary) issued
by the Local Authority. The application for Butchers Licence had to specify the premises
where the trade was to be carried out. The procedure to be followed prior to the issue of a
licence is given in section 4 to 7 of the Butchers Ordinance. The Councils are authorised
to charge a levy to inspect the slaughtered animals under section 11 of the Butchers
Ordinance.
b. Legal requirement
For MC & UC
Section 11 of Butchers Ordinance.
Revenue Source 30 – Licensing of Clubs
a. This Law has been enacted to provide for the control of clubs and for matters connected
therewith. In terms of the Section 2 of the Law it is unlawful to run a club without a
licence issued by the Mayor/Chairman of the Local Authority. Under section 4 of this
Law, the Minister is empowered to prescribe in respect of every Local Authority to scale
of fees payable in respect of a license to maintain a club provided however, the fees so
prescribed must not exceed the limits prescribed by the Act.
b. Legal requirement MC & UC
Licensing of Clubs Act No 17 of 1975 section No 04
c. Procedures and Practices
Key Steps Key Activities Remarks
1. Issue of Club
License
i. Manager of the Club
submit an application to
the Council
ii. Obtain certification as
per the requirements of
the Act iii. Publish a notice in the
Gazette stating the
request of license.
iv. If there are no
objections, charge the
relevant fee and issue the
license
Revenue Source 31 Environmental Protection Licence fees
a. The Central Environment Authority has, under the national environmental Act, conferred
on Local Authorities, the powers to deal with minor pollution agents in relation to
environmental protection. The power to issue environmental protection licences has also
been conferred. Minor pollution agents include small scale saw mills, rice mills, stone
crushers, livestock farms, garages, printing press and grinding mills.
b. Legal requirement MC & UC
Section Number 32 of National Environment Authority Act No 26, of 1988 – Please
refer the attached Schedule No 1
Revenue Source 32 - Issue of Licences (Trade Licences)
a. Local Authorities may impose and levy a duty in respect of licences issued by the
council. The duty levied as above in respect of any licences issued by the council
authorizing the use of any premises for any of the purposes described in this
ordinance or in any by-law made there under shall be determined by the Council
according to the annual value of the premises.
b. MC Ordinance
Applicable By-Laws to be read with Section 247 (A) of MC Ordinance – Please refer
Schedule No 111
c. Procedures and Practices
Key Steps Key Activities Remarks
1. Identify the
premises where the
license needs to be
issued.
i. Conduct a survey, in
advance to identify the
premises where the
licenses need to be
issued.
ii. Issue the notices in the
month of December for
the licenses for the
succeeding year.
Maximum Limit
chargable is LKR
5000/-
Refer Schedule
No 111 for the list
of trade activities
where licence
needs to be
obtained from MC
2. Issue of Licenses i. Receive requests for
Licenses
ii. Ensure that the
necessary requirements
are fulfilled to issue the
Licenses
iii. If not, notice to issued to
rectify the problems
iv. Inform the owners when
the License are ready to
be issued
v. Charge the relevant fee
and issue licenses
3. Council to take
Legal action
against defaulters
i. Inform the
Magistrate’s Court
having jurisdiction
over the area in
which the council is
situated.
ii. Recover the penalty
imposed by the
Courts
iii. Inform the occupier
to obtain Licence
immediately
iv. Issue the License
v. If Licenses are not
obtained council to
get a court direction
to wind up the
business
Revenue Source 33-35
Public Slaughter House – Exposure of flesh of Animals
Public Slaughter House- Emergency Permits to transport animals -
Public Slaughter House-Transportation of Meats
a. The trade of butcher had to be carried out only on a licence (annual or temporary) issued
by the Local Authority. The application for Butchers Licence had to specify the premises
where the trade was to be carried out. The procedure to be followed prior to the issue of a
licence is given in section 4 to 7 of the Butchers Ordinance.
Under section 26 to 29 public slaughter house have to be certified as sufficient for the
purpose by the Local Authority to the Provincial Minister who would then issue a notice
proclaiming such slaughter house. Regulations could be made by the Local Authority in
regard to the public slaughter house. The person in charge of public slaughter house
could seize and destroy diseased animals brought to the public slaughter house. Under
Section 13A of Butchers Ordinance no person can sell or expose for sale or cause to be
sold or exposed for sale flesh of any animal at any place other than in a building
constructed in conformity with the plan approved by Provincial Secretary to the Ministry
of Local Govt.
b. Legal requirement MC & UC
If there are slaughter houses within the jurisdiction of the council, the council can
impose the relevant sections as per the Butchers Ordinance.