In January 2012, China launched the “BT-to-VAT Plan” to change the VAT rate within the Chinese banking industry. The plan is a VAT reform attempts to reduce the tax burden of China’s banking industry, and address problems of applying a business tax. Since a key point of this reform is the appropriateness of the VAT rate, this study measured and examined appropriate VAT rate with the data of China’s state-owned and general commercial banks by looking at their annual reports between 2010 and 2011. This study found that among the two different calculation methods(i.e., net basis and general) of VAT, the “net basis calculation method” cannot solve the essential problems of “double taxation”, as it is not a deductible for purchasing items. Therefore, the general calculation method is a better choice. This method is critical to maintain the VAT rate at a level of no more than 6%.