TAIPEI - A new taxation pact between Taiwan and the mainland will save businesses on either side of the Strait billions of New Taiwan dollars a year and provide a powerful boost to the island's revenue, its financial agency said Tuesday.

The agreement on avoiding dual taxation will be signed at a meeting between the mainland's Association of Relations Across the Taiwan Straits and Taiwan's Straits Exchange Foundation in the eastern city of Fuzhou from Aug. 24 to 26, according to the island's Mainland Affairs Council.

Taiwanese financial officials say the pact is becoming more and more necessary as cross-strait trade surges.

Based on 2011 data, the agreement will save an estimated 3.9 billion new Taiwan dollars ($121 million) and 100 million new Taiwan dollars in taxation for Taiwanese and mainland businesses respectively, and add a net tax revenue increase of 8.1 billion to 13.3 billion new Taiwan dollars for the island.