Via the picture it is hard to tell how deep that damage goes, but it certainly doesn't look like a minor scuff. I'd certainly be concerned about using this tyre and it would be on my mind say whilst traveling on fast roads etc
In this case I would advise that the tyre be replaced. Damage like this certainly would be cause for the vehicle to fail an MOT test, here in the UK anyway.
Given the sidewall damage evident in the photo, I would be inclined to replace the tire.
Even though your photo is clear, it is not clear how much rubber has been removed, and that is why an in-person inspection would be good. Certainly, if you are near any kind of cord in the sidewall, I would replace.
A sidewall failure can be quite disconcerting, and can happen quickly. It may not be an issue today, but as the tire wears, and under conditions such as mild underinflation, or high temperatures, the sidewall would be more likely to fail with some thickness removed, as the photo evidenced.
Keep in mind that the sidewall in that region is the thinnest portion of the tire, and they are not repairable.