In fact, China first began VAT trials as early as in 1979 and started applying the tax to specific sectors in 2012. The final four sectors to adopt a VAT from this month are construction, property, finance and services, all major pillars of the Chinese economy.

It's the May Day holiday in China. And as people do every year, they are enjoying their three days off by traveling and shopping. The holiday is also a brief golden moment for the services industry. What makes the holiday more exciting this year is that from this month, stores and restaurants can save more costs thanks to the fully implemented value-added tax system.

"Our whole cost can be reduced. We often need to decorate and maintain the hotel. Now these costs can be used to deduct taxes," said Guan Zhiquan, standing VP of Catering Association of Tianhe District, Guangzhou City.

Consumers now also have a clearer picture about how they spend on shopping and eating. Their VAT invoices will show prices and VAT separately. Another notable change in the tax reform is that the collecting agency has been moved from local governments to the central government though the two will share VAT revenue equally.

The government anticipates that the reforms will cut businesses' tax burdens by more than 500 billion yuan, or over 77 billion U.S. dollars, this year.