BEIJING—China will set its biggest tax overhaul in a generation this Sunday as it tries to boost economic growth by cutting costs for service providers and manufacturers and prodding them to invest.

The new value-added tax system eases the burden on companies in an effort to stimulate an economy whose slowdown has dented China’s confidence and reverberated across the globe. The model also aims to spur China’s transition away from low-cost manufacturers to service providers such as insurers and entertainers.

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