The legal and physical basis used to calculate taxes in accordance with a nation’s tax rules is referred to as tax residency. Tax residency, however, is more closely related to international cross-border matters than it is to GCC internal tax rules; more precisely, it is related to the legitimate avoidance of double taxation in two nations through the Double Tax Avoidance Agreement (DTAA) treaties between nations. This is a significant area of concern, particularly for multinational corporations that operate in several different tax countries. These businesses are eligible to benefit from any applicable DTAAs that the individual GCC nations have with other nations. Tax residency is relevant to both people and businesses.

A Tax Residency Certificate (TRC) certifies residency in accordance with the law. The TRC is an official certificate or document provided by a nation’s tax authority to tax residents and non-resident entities that meet the residency requirements specified by the nation’s domestic income tax legislation. To be eligible for any benefits of reduced or no taxes in the source or resident nation with regard to the DTAA, one must first obtain a Tax Domicile Certificate (TRC), as it is called in some countries, including the United Arab Emirates.