China will complete tax reforms this year to replace the business tax with the value-added tax (VAT), Finance Minister Lou Jiwei said on Monday, acknowledging slow progress last year due to the scale and intricacy of implementing the reforms.

Replacing the business tax based on revenue with the VAT, which is levied on the difference between output and input, will remove tax duplication in the previous system and save companies the equivalent of billions of dollars in tax, but the reforms will face obstacles, analysts noted.

"The shift from the business tax to the VAT for major tax categories must be completed this year," Lou told a briefing in Beijing Monday on the sidelines of this year's annual session of the National People's Congress (NPC).

Lou said progress in implementing the VAT reform last year was slower than planned because it involves many industries and the process is complex, but this year the central government has set a deadline for the reforms.

Premier Li Keqiang said in this year's Government Work Report that starting on May 1, VAT reforms will be "fully" implemented and expanded to the construction, real estate, financial and services industries. Li noted that new fixed assets of all companies will be deductible to ensure the tax burden for all industries will be "reduced, not increased."

The VAT reforms will significantly ease the tax burden on companies and help them increase revenues, Jiang Zhen, a research fellow at the China Academy of Social Sciences, told the Global Times Monday.

However, the implementation of the reforms will face some obstacles because it will significantly reduce tax income for both the central and local governments and add to various governments' fiscal deficits, noted Gao Liankui, an economics professor at the Renmin University of China.

Lou on Monday acknowledged concerns over tax income declines for governments, but he said the reforms must be carried forward because they are conducive to growth in the services sector and upgrading in the manufacturing industry.

"Transitional measures" will be taken to deal with tax income reductions for local governments, according to the finance minister.

Jiang also noted that the tax reforms are just part of the country's robust reform plan, which comes amid a slowdown in the economy that has created the need to find new growth engines.

Lou said reform plans for taxation on property and individual incomes are also underway.