Tax Residency Certificate (TRC) is a certificate issued by the tax authorities of a country to confirm that an individual or a company is a tax resident of that country. The TRC is used to establish the taxpayer’s residency status and is typically required for claiming tax benefits under Double Taxation Avoidance Agreements (DTAA) between two countries.
The certificate is important for individuals or businesses earning income in foreign countries, as it helps avoid being taxed twice on the same income—once in the country of residence and once in the country where the income is generated. The TRC verifies that the taxpayer is liable to pay tax in their country of residence, which can then be used to claim relief or exemptions under the applicable DTAA.
To obtain a TRC, the applicant must submit a request to the local tax authorities, providing necessary documentation like proof of residency and income. Once granted, the TRC serves as evidence of residency for tax purposes and facilitates tax relief during international transactions.