Shanghai's annual tax revenue declined about 20 billion yuan ($3.2 billion) in 2012, after the city launched a pilot tax reform program to replace business tax with value-added tax, which aims to avoid duplicated levies.

Hu Lanfang, deputy director of the local tax bureau, said that by the end of 2012, a total of 159,000 companies were included in the pilot program. Taxation was clearly reduced for small-scale taxpayers and services-export companies, the Shanghai-based China Business News reported on Wednesday.

Another 10 provinces and regions are likely to join the tax reform program soon, the Finance Ministry said last week.

The program is expected to be expanded nationwide during the 12th Five-Year Plan (2011-15) period, and will help to reduce several hundreds of billion yuan in taxes.

In 2012, the tax reform program helped to cut 42.6 billion yuan in taxes for companies in the pilot areas, according to the ministry.