The Future of Manufacturing Tax: Preparing for What's Next

When manufacturing experts peer into their crystal ball, they see a future defined by cross-industry collaboration, connected products and integrated solutions. When indirect tax leaders consider these 'Manufacturing 2030' trends, they’re likely to see an imposing set of tax compliance challenges.

Based on surveys of more than 400 industrial manufacturing leaders around the world, PwC’s 2026 global manufacturing outlook assesses trends, opportunities and risks in the sector while focusing on the most notable ways manufacturing executives expect their organisations to evolve during the next four years. Key takeaways from the report include:

• Technology enablement and automation adoption are surging throughout supply chains. Survey respondents expect supply chains to be two to three times more automated than they are in 2026. By 2030, competitive advantage will stem less from having advanced tools in place than from how well the tools and data they use are orchestrated.
• Revenue growth will come from sources other than traditional industrial and consumer products. This translates to more product-service bundles, connected offerings and outcome-based services.
• Upskilling and digital/data infrastructure are at risk. The survey report warns that underinvesting in both areas will make it difficult for manufacturing companies to take full advantage of growth opportunities. 
• New enablers are emerging: Manufacturers will outperform competitors on the basis of operational excellence, customer-centricity and innovation – and that the execution of these strategies requires “clean, connected data; interoperable systems; disciplined operating models; and strong, trust-based organisational cultures,” as per the report.

Manufacturing Tax Challenges Between Now and 2030

A couple of these trends will raise eyebrows across indirect tax groups. Regarding changing sources of growth, the report indicates that 44% of total revenue is projected to come from outside the manufacturing of industrial and consumer products by 2030 via:

• Technology, digital, and communications products and services
• Defence, governmental and educational offerings
• Energy and fuel production and distribution

How Tax Can Keep Pace

As manufacturers move into new categories, collaborate with new partners and create new products, larger numbers of new SKUs will need to be classified for VAT/GST and sales and use tax (SUT) purposes. Exemption management processes will also need to keep pace with these changes. New offerings related to energy and fuel distribution can push traditional manufacturers beyond their existing compliance footprints into excise-tax and environmental-levy regimes.

Another tax compliance challenges looms. As manufacturers develop and sell larger volumes of integrated solutions (as opposed to discrete products), those offerings will need to be parsed from multiple tax angles. Bundling is thorny from an indirect tax compliance perspective. Is the offering composite or mixed? Does a single rate apply or do multiple rates come into play? Are there any exempt elements? Answers to those and other questions vary by tax jurisdiction. 

Outcome – and subscription-based models also change the timing and nature of taxable transactions: one-time sales give way to recurring supplies that require ongoing invoicing, time-of-supply determinations and,in some tax regimes, continuous reporting. 

The report emphasises that data integrity will be a foundational pillar of the emerging environment, which PwC describes as a “race to tech-enable and automate broad swaths of industrial manufacturing.”  A similar idea applies to indirect tax: tax data integrity, supported by a purpose-built tax engine, must be a foundational enabler of an advanced tax compliance and planning capability if tax groups are to keep pace in the race to 2030. This Vertex-BDO white paper is a good starting point; it details how leading manufacturers are leveraging automation to address tax compliance today.