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RMMF: The Smart Choice for SME Reserves

Posted LnCoadmin

Under the dual pressures of inflation and business competition, are your company’s reserve funds still sitting idle in a standard Current Account? Or is your cash flow locked up in Fixed Deposits (FDs)?
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Introducing the financial instrument increasingly chosen by businesses: the Retail Money Market Fund (RMMF)! An RMMF is a type of unit trust fund that invests in short-term debt instruments with low risk. This fund is established with the aim of providing a stable investment medium and ease in the liquidation of assets.

What is an RMMF?

An RMMF is a type of unit trust fund that invests in short-term debt instruments with low risk. This fund is established with the aim of providing a stable investment medium, ease in liquidation of assets and serves as a temporary investment mechanism for retail investors who are seeking better return than savings accounts without being exposed to high investment risks.

Why Use an RMMF? (Three Core Benefits)

  1. Superior Daily Returns: Earn higher rates than standard savings or current accounts. Interest is calculated daily, ensuring your idle cash works for you every single day.
  2. High Liquidity: Unlike Fixed Deposits, there are no penalties for early withdrawal. You can liquidate assets instantly to meet urgent cash flow demands.
  3. Tax Efficiency & Compliance: Features a transparent, corporate-friendly tax mechanism. It simplifies accounting and ensures your company remains fully compliant with Malaysian tax regulations.

Comparison Table

Features Current Account Fixed Deposit (FD) RMMF (Retail Money Market Fund)
Interest Returns Very Low Medium Better than ordinary savings
Liquidity Very High Requires lock-in period (penalty for early withdrawal) High (T+1/T+2 withdrawal)
Risk Level Very Low Very Low Low Risk (Steady)

How is it taxed?

  • Taxable for Corporates: RMMF income is tax-exempt for individual investors. However, for resident companies (like your Sdn Bhd), the distributed income is taxable.
  • 24% Withholding Tax: The RMMF is required to automatically deduct a 24% withholding tax on the gross interest income distributed to non-individual unit holders.
  • Claimable Tax Credits: Corporate unit holders are eligible to claim this 24% deduction as a tax credit under subsection 110(9A) of the ITA. Think of it as an advance tax payment that can directly offset your year-end corporate tax liabilities.
  • Clear Documentation: If an RMMF deducts withholding tax, the income is legally considered taxable, even if the voucher labels it as “non-taxable”. The “Taxable Income” column on the voucher clearly indicates the distributed portion, making accounting straightforward.

**Last Updated on 23.03.2026