diff --git a/templates/pkg/resource/manager.go.tpl b/templates/pkg/resource/manager.go.tpl
index b372f10d..1d6adbda 100644
--- a/templates/pkg/resource/manager.go.tpl
+++ b/templates/pkg/resource/manager.go.tpl
@@ -89,6 +89,7 @@ func (rm *resourceManager) ReadOne(
 		panic("resource manager's ReadOne() method received resource with nil CR object")
 	}
 	observed, err := rm.sdkFind(ctx, r)
+	mirrorAWSTags(r, observed)
 	if err != nil {
 		if observed != nil {
 			return rm.onError(observed, err)
@@ -311,6 +312,96 @@ func (rm *resourceManager) EnsureTags(
 {{- end }}
 }
 
+// FilterAWSTags ignores tags that have keys that start with "aws:"
+// is needed to ensure the controller does not attempt to remove
+// tags set by AWS. This function needs to be called after each Read
+// operation.
+// Eg. resources created with cloudformation have tags that cannot be
+//removed by an ACK controller
+func (rm *resourceManager) FilterSystemTags(res acktypes.AWSResource) {
+{{- if $hookCode := Hook .CRD "filter_tags" }}
+{{ $hookCode }}
+{{ else }}
+{{ $tagField := .CRD.GetTagField -}}
+{{ if $tagField -}}
+{{ $tagFieldShapeType := $tagField.ShapeRef.Shape.Type -}}
+{{ $tagFieldGoType := $tagField.GoType -}}
+{{ if eq "list" $tagFieldShapeType -}}
+{{ $tagFieldGoType = (print "[]*svcapitypes." $tagField.GoTypeElem) -}}
+{{ end -}}
+	r := rm.concreteResource(res)
+	if r == nil || r.ko == nil {
+		return
+	}
+	var existingTags {{ $tagFieldGoType }}
+{{ $nilCheck := CheckNilFieldPath $tagField "r.ko.Spec" -}}
+{{ if not (eq $nilCheck "") -}}
+    if {{ $nilCheck }} {
+        return
+    }
+{{ end -}}
+    existingTags = r.ko.Spec.{{ $tagField.Path }}
+	resourceTags := ToACKTags(existingTags)
+	IgnoreAWSTags(resourceTags)
+{{ GoCodeInitializeNestedStructField .CRD "r.ko" $tagField "svcapitypes" 1 -}}
+	r.ko.Spec.{{ $tagField.Path }} = FromACKTags(resourceTags)
+{{- end }}
+{{- end }}
+}
+
+// MirrorAWSTags ensures that AWS tags are included in the desired resource
+// if they are present in the latest resource. This will ensure that the
+// aws tags are not present in a diff. The logic of the controller will
+// ensure these tags aren't patched to the resource in the cluster, and
+// will only be present to make sure we don't try to remove these tags.
+//
+// Although there are a lot of similarities between this function and
+// EnsureTags, they are very much different.
+// While EnsureTags tries to make sure the resource contains the controller
+// tags, mirrowAWSTags tries to make sure tags injected by AWS are mirrored
+// from the latest resoruce to the desired resource.
+func mirrorAWSTags(a *resource, b *resource) {
+{{- if $hookCode := Hook .CRD "sync_tags" }}
+{{ $hookCode }}
+{{ else }}
+{{ $tagField := .CRD.GetTagField -}}
+{{ if $tagField -}}
+{{ $tagFieldShapeType := $tagField.ShapeRef.Shape.Type -}}
+{{ $tagFieldGoType := $tagField.GoType -}}
+{{ if eq "list" $tagFieldShapeType -}}
+{{ $tagFieldGoType = (print "[]*svcapitypes." $tagField.GoTypeElem) -}}
+{{ end -}}
+	if a == nil || a.ko == nil || b == nil || b.ko == nil {
+		return
+	}
+	var existingLatestTags {{ $tagFieldGoType }}
+	var existingDesiredTags {{ $tagFieldGoType }}
+{{ $nilCheck := CheckNilFieldPath $tagField "b.ko.Spec" -}}
+{{ if not (eq $nilCheck "") -}}
+    if {{ $nilCheck }} {
+        return
+    }
+{{ end -}}
+{{ $nilCheck = CheckNilFieldPath $tagField "a.ko.Spec" -}}
+{{if not (eq $nilCheck "") -}}
+	if {{ $nilCheck }} {
+		existingDesiredTags = nil
+	} else {
+		existingDesiredTags = a.ko.Spec.{{ $tagField.Path }}
+	}
+{{ else -}}
+	existingDesiredTags = a.ko.Spec.{{ $tagField.Path }}
+{{ end -}}
+    existingLatestTags = b.ko.Spec.{{ $tagField.Path }}
+	desiredTags := ToACKTags(existingDesiredTags)
+	latestTags := ToACKTags(existingLatestTags)
+	SyncAWSTags(desiredTags, latestTags)
+{{ GoCodeInitializeNestedStructField .CRD "a.ko" $tagField "svcapitypes" 1 -}}
+	a.ko.Spec.{{ $tagField.Path }} = FromACKTags(desiredTags)
+{{- end }}
+{{- end }}
+}
+
 // newResourceManager returns a new struct implementing
 // acktypes.AWSResourceManager
 // This is for AWS-SDK-GO-V2 - Created newResourceManager With AWS sdk-Go-ClientV2
diff --git a/templates/pkg/resource/tags.go.tpl b/templates/pkg/resource/tags.go.tpl
index 43f6d60b..7cd40a11 100644
--- a/templates/pkg/resource/tags.go.tpl
+++ b/templates/pkg/resource/tags.go.tpl
@@ -86,4 +86,45 @@ func FromACKTags(tags acktags.Tags) {{ $tagFieldGoType }} {
     return result
 }
 {{ end }}
+
+// IgnoreAWSTags ignores tags that have keys that start with "aws:"
+// is needed to ensure the controller does not attempt to remove
+// tags set by AWS
+// Eg. resources created with cloudformation have tags that cannot be
+// removed by an ACK controller
+func IgnoreAWSTags(tags acktags.Tags) {
+	for k := range tags {
+		if strings.HasPrefix(k, "aws:") ||
+			strings.HasPrefix(k, "services.k8s.aws/") {
+			delete(tags, k)
+		}
+	}
+}
+
+// SyncAWSTags ensures AWS-managed tags (prefixed with "aws:") from the latest resource state
+// are preserved in the desired state. This prevents the controller from attempting to
+// modify AWS-managed tags, which would result in an error.
+//
+// AWS-managed tags are automatically added by AWS services (e.g., CloudFormation, Service Catalog)
+// and cannot be modified or deleted through normal tag operations. Common examples include:
+// - aws:cloudformation:stack-name
+// - aws:servicecatalog:productArn
+//
+// Parameters:
+//   - a: The target Tags map to be updated (typically desired state)
+//   - b: The source Tags map containing AWS-managed tags (typically latest state)
+//
+// Example:
+//
+//	latest := Tags{"aws:cloudformation:stack-name": "my-stack", "environment": "prod"}
+//	desired := Tags{"environment": "dev"}
+//	SyncAWSTags(desired, latest)
+//	desired now contains {"aws:cloudformation:stack-name": "my-stack", "environment": "dev"}
+func SyncAWSTags(a acktags.Tags, b acktags.Tags) {
+	for k := range b {
+		if strings.HasPrefix(k, "aws:") {
+			a[k] = b[k]
+		}
+	}
+}
 {{ end }}
\ No newline at end of file