Its occupation mainly depends on the production scale, material consumption level, supply conditions and management level of the enterprise. Generally, it is necessary to formulate a reasonable quota so that it can meet the needs of production without wasting the use of funds. Conditional enterprises can also determine the "economic order quantity" for their main categories, so that enterprises can meet the needs of reserve materials at the lowest cost.
Reserve fund withdrawal ratio:
The profits of a foreign-capital enterprise after paying income tax in accordance with the provisions of China tax law shall be drawn from reserve funds and employee incentive and welfare funds. The withdrawal ratio of the reserve fund shall not be less than 10% of the after-tax profit. When the accumulated withdrawal amount reaches 50% of the registered capital, it shall not be withdrawn. The proportion of employee incentive and welfare funds shall be determined by the foreign-funded enterprises themselves.
Regulations for the Implementation of the Law of the People's Republic of China on Chinese-foreign Joint Ventures Article 76 The principles of profit distribution of a joint venture after paying income tax in accordance with the Enterprise Income Tax Law of People's Republic of China (PRC) are as follows:
(1) Withdraw reserve fund, employee bonus and welfare fund and enterprise development fund, and the withdrawal ratio shall be determined by the board of directors;
(two) the reserve fund can be used to make up for the losses of the joint venture, and with the approval of the examination and approval authority, it can also be used to increase capital and expand production;
(3) If the board of directors decides to distribute the distributable profits after the three funds are withdrawn according to the provisions in Item (1) of this article, they shall be distributed in proportion to the capital contribution of each party to the joint venture.