Chinese Premier Li Keqiang (2nd R) visits the State Administration of Taxation in Beijing, capital of China, April 1, 2016. [Photo: Xinhua/Li Tao]

Chinese Premier Li Keqiang has urged the country's financial and taxation authorities to push ahead with replacing business tax with VAT in certain industries.

Li was speaking during a visit to the State Administration of Taxation and the Ministry of Finance on Friday.

The value-added tax reform, which began in 2012, is part of government efforts to invigorate the real economy.

Starting from May 1, the changes will be applied to the construction sector, real estate, finance and consumer services, to avoid double taxation.

Premier Li hailed the expansion of the VAT scheme as a major step in China's structural reform.

"We are reducing the tax burdens on companies aiming to help them counter downward pressures on economic growth. Moreover, it will avoid double taxation. This is a significant taxation reform, we must ensure the tax cuts to be implemented in all industries."

VAT is levied on the difference between a commodity's price before taxes and its production cost. Business tax is levied on a business's gross revenues.

The expansion of the reforms will ease taxes by more than 500 billion yuan, or nearly 77 billion U.S. dollars this year.

In the face of continued economic headwinds, China has made supply-side reform an economic priority, and tax cuts to lower business costs a major policy option.

To make up for lost revenues from the tax reductions for enterprises, the government has decided to increase its deficit-to-GDP ratio to 3 percent this year from 2.3 percent last year.

The government deficit for 2016 is projected at 2.18 trillion yuan, an increase of 560 billion yuan over last year.

Author： 　　　Source：CRI　　　 Editor：Yang Fan