CHINA will suspend the value-added tax and turnover tax on small businesses with monthly sales of less than 20,000 yuan (US$3,226) from August 1.

The announcement was made in a statement released yesterday after an executive meeting of the State Council presided over by Premier Li Keqiang.

The move will benefit more than six million small companies and directly relate to tens of millions of people, the statement said.

VAT refers to a tax levied on the difference between a commodity's price before taxes and its cost of production. Turnover tax refers to a levy on the gross revenue of a business.

The meeting also discussed measures to facilitate foreign trade and stabilize exports.