In one sentenceA certificate issued by a country's tax authority confirming that a person or company is tax resident there; it is used to apply double taxation agreements.
Simply put
If you want to apply the reduced treaty rate to a payment to a foreign supplier, ask him for a valid tax residency certificate from his country before paying.
A Saudi business may also need a residency certificate from ZATCA to give to customers in other countries.
Example
A contracting company pays a foreign engineering office: it asks for its tax residency certificate from its country before applying the treaty rate, otherwise it withholds at the statutory rate.
Don't confuse it with
Zakat certificateThe Zakat certificate proves that Zakat has been paid, while the residency certificate proves only the country of tax residence.