A Beijing program that will replace the business tax with a value-added tax to avoid duplicate taxation is likely to save the municipality's residents 16.5 billion yuan ($2.6 billion) a year.

The reform will take effect on Sept 1 in the capital city, after a similar program was launched in Shanghai at the beginning of the year.

A total 138,000 taxpayers in transportation and modern-service sectors who pay the business tax will be involved in the reform, Xinhua reported, citing a statement from the launching ceremony.

The VAT reform will lead to a tax reduction of 16.5 billion yuan from the 33 billion yuan levy on these taxpayers, it said.

Most of these taxpayers will see their tax burden reduced after the reform, but some may also see a rise in their tax rates, the statement said. Local authorities are considering offering supporting measures to guarantee a smooth transition, the statement said.