Tax Challenges Affecting the Manufacturing Industry

Why manufacturers struggle with tax compliance

Manufacturers face tax challenges that go well beyond standard sales transactions. Supply chain disruption, cross-border growth, and constantly shifting tax regulations have created a compliance environment that most ERP systems simply weren't designed to handle. The result: overpayments, underpayments, audit exposure, and IT teams stretched thin managing custom workarounds.

Where ERP tax capabilities fall short

ERP platforms deliver real value for operations, scheduling, and resource management. But their native tax functions tend to be too rigid for the realities of manufacturing. They often can't account for how an item is used, a critical factor in determining exemptions. They struggle with multi-jurisdictional requirements, exemption certificate tracking, and the pace at which global tax rules change. As manufacturers scale, these limitations compound. According to IDG research, 60% of manufacturing organizations plan to upgrade or replace their ERP, and 51% plan to upgrade or purchase a new tax solution.

Exemptions and nexus rules add another layer of risk

Since the South Dakota v. Wayfair ruling in 2018, manufacturers must register and file in every jurisdiction where they have economic nexus. Exemption rules vary widely by state. Some cover the full manufacturing workflow, others only direct production. Nearly 57% of financial professionals say collecting, tracking, and storing exemption certificates is extremely or very challenging. Getting this wrong creates real audit liability.

How Vertex fills the gap

Vertex tax solutions integrate directly with Microsoft Dynamics 365 to automate tax determination across every transaction. The integration pulls data from your ERP, runs it through Vertex's tax calculation engine, and returns an accurate result, automatically posted to the right fields in Dynamics 365. Tax teams can review line-item detail on any sales order, recalculate taxes on the fly, and generate signature-ready returns. IT teams spend less time on tax infrastructure and more time on core priorities.

Vertex supports five Microsoft Dynamics 365 environments: Business Central, Finance and Supply Chain Management, Commerce, Sales, and Dynamics GP. Each integration is built and maintained by Vertex, validated to Microsoft standards, and available through Microsoft AppSource.

A partnership built for manufacturers

Vertex and Microsoft have worked together for more than a decade to help joint customers extend the value of their Microsoft investments, streamline global tax compliance, and support business growth. With 40-plus years in tax technology, support for 130-plus countries, and 59% of the Fortune 500 as customers, Vertex brings the depth of expertise manufacturers need to manage indirect tax with confidence.