Conquering Manufacturing Tax Compliance Challenges

Manufacturing tax compliance is hard. Complex supply chains, shifting regulations, and volatile tax rates create pressure that most indirect tax groups struggle to absorb. This is especially true when they are already stretched thin.

This white paper, developed with BDO, explains how manufacturers can take control of indirect tax compliance by building a strong tax data management foundation and making the right investments in tax automation.

The compliance challenges manufacturers face

Manufacturers deal with a unique set of indirect tax pressures. U.S. sales and use tax rate changes hit a 10-year high in 2023. EU manufacturers face a wave of new e-invoicing and real-time reporting requirements under the ViDA initiative. At the same time, individual U.S. states and local taxing authorities are layering on new fees (retail delivery fees, environmental fees, and more), each with its own collection and remittance rules.

Four specific compliance hurdles stand out: keeping pace with changing rules and rates, tracking the physical flow of goods for VAT purposes, managing manufacturing exemptions that vary by state, and maintaining the data quality that modern compliance demands.

Native ERP or standalone tax engine?

One of the central decisions manufacturers face is whether to rely on their ERP system's built-in tax functionality or invest in a standalone tax engine. The white paper walks through the key evaluation criteria for both, including how quickly tax content updates, how well the solution scales, and whether it supports centralized reporting and automated filings. A standalone tax engine, built specifically for indirect tax, typically offers broader coverage and stronger data management capabilities.

Building a business case that gets approved

Getting internal buy-in for tax automation requires more than a cost-savings calculation. The white paper outlines what an effective business case covers: from quantifying hidden compliance costs and manual workarounds to connecting tax compliance performance to customer satisfaction, vendor relationships, and broader business goals. Tax leaders who frame automation as a strategic investment, not just a cost center, are more likely to earn support from CFOs and CIOs.

Where to start

The white paper closes with a practical recommendation: start building your business case now. Establishing an indirect tax group charter and documenting known and hidden compliance costs puts manufacturers in a stronger position, whether an investment decision is imminent or still on the horizon. As BDO research notes, many manufacturers are not fully realizing the tax opportunities available to them. Better tax-business collaboration starts with a solid compliance foundation.