residence principle

The residence principle is a concept in international law and taxation that determines where a person or entity is considered to live or be based for legal and tax purposes. Essentially, it means that individuals or businesses are subject to the laws and taxes of the country where they reside. This principle helps nations establish jurisdiction over residents, ensuring they comply with local laws and pay appropriate taxes based on their residence rather than merely where transactions occur. It aims to prevent tax evasion and ensures a fair allocation of tax responsibilities among different countries.