The surplus reserves extracted by enterprises can be used to make up losses, expand production and operation, increase capital (or share capital) or send new shares. Can't be used as a reward fund for employees.

Surplus reserve refers to the profit accumulation extracted from after-tax profits and left in the enterprise with specific purposes. Surplus reserve is divided into public welfare fund and general surplus reserve according to different purposes.

The public welfare fund is specially used for the expenditure of welfare facilities for employees of enterprises, such as the purchase and construction of dormitories, nurseries and barbershops. In 2006, the new company law only stipulated that the company should withdraw the statutory provident fund according to 10% of after-tax profits. All provisions on "statutory public welfare fund" have been abolished. According to the provisions of the enterprise income tax, the statutory surplus reserve of a company-based enterprise is 65,438+00% of the net profit (minus the losses of previous years). According to the provisions of enterprise income tax, the losses in previous years (within five years) can be made up by pre-tax profits, and from the sixth year onwards, they can only be made up by after-tax profits in the sixth year.