The central government will determine a reasonable share of revenue for local governments from the value-added tax, which will replace the business tax nationwide next month, Premier Li Keqiang said on Monday.

Li was speaking to heads of government of 20 provinces, municipalities and autonomous regions at a meeting while soliciting opinions on how to divide the expanded VAT.

The expansion of the VAT will encourage businesses to invest effectively in equipment and technological upgrading, the premier said, because the tax is levied on the difference between revenue and cost.