Malaysia and the Hong Kong Special Administrative Region of China on Wednesday signed a Double Taxation Avoidance agreement that would reduce taxes, avoid double taxing for residents in both places and allow authorities to exchange taxpayers' information to prevent fiscal evasion.

The agreement was signed by Hong Kong's financial secretary John Tsang and Malaysia's second finance minister Ahmad Husni Mohamad Hanadzlah at the prime minister's office here.

Malaysian Prime Minister Najib Razak witnessed the signing ceremony.

The Malaysian finance ministry said the agreement grants tax certainties for cross-border businesses and taxing rights to Malaysia and the Chinese special administrative region to avoid double taxation for income taxes, among others.

"By signing the agreement, it will boost closer economic and trade ties between the two places and it provides added incentives for companies in Malaysia to do business or invest in Hong Kong, and vice versa," the ministry said in a statement.

An official of the ministry said the deal, the 74th of such signed by Malaysia with its trading partners, would have to be ratified by the legislators from both sides before taking effect.

Tsang was accompanied by his press secretary Patrick Wong, director of the Hong Kong Economic and Trade Office in Singapore Fong Ngai and several other delegates.