Rethinking Compliance as a Continuous Discipline: The Decision-to-Defense Approach

For years, indirect tax has been treated as something enterprises manage after the fact: calculate the tax, file the return, respond to the audit and move on. That model no longer reflects the world businesses operate in. Compliance obligations are moving closer to the transaction itself, becoming more digital, more continuous and more specific to each invoice, jurisdiction and customer interaction. Vertex research reveals that nearly half of enterprise leaders, 45%, cite keeping up with changing tax regulations as a top compliance challenge, reinforcing why compliance can no longer be managed as a periodic or downstream function.

That shift changes the role of compliance from decision to defense — requiring enterprises to manage indirect tax compliance continuously, from the initial tax decision through audit defense. It is no longer enough for a tax decision to be right in the moment. Enterprises also need the confidence to understand how that decision was made, prove it later, adapt it as regulations change and defend it when challenged.

Across Vertex’s research with more than 2,100 enterprise leaders, a clear pattern emerges: many organizations are investing in compliance modernization, but still struggle to connect tax decisions, operational controls and audit readiness into one continuous discipline.

Two Compounding Pressures

That research exposes two compounding pressures inside the enterprise. The first is Defensibility Drift™: the distance that forms between the tax decision made in the flow of business and the organization’s ability to explain and support that decision later. With 58% of enterprises facing highly complex indirect tax audits, that ability to prove and defend decisions is becoming a defining test of compliance confidence. The second is Compliance Operations Drag™: the friction created when tax, finance, IT, commerce and reporting systems do not operate as one connected environment.

These pressures matter because they do not simply make compliance harder. They limit confidence. And when leaders lack confidence in the systems, data and controls behind their tax decisions, they lose the ability to move with speed, adapt to change and fully capture the value available to the business. Left ungoverned, drift and drag compound over time. Every new mandate adds another layer of complexity. Every manual workaround creates another point of risk. Every disconnected system makes it harder to trace a decision back to the evidence needed to support it. Their cumulative cost has a name: the Compliance Confidence Gap™ — the measurable distance between the revenue an enterprise could book with defensible confidence and the revenue it conservatively reports because it cannot prove every determination.

That gap has a measurable financial impact. One in three US enterprises estimates that conservative indirect tax treatment leaves more than $1 million on the table each year — for example, through missed exemptions, unnecessarily taxable transactions or unclaimed indirect tax.

A New Discipline for Continuous Compliance

This is why we believe the next era of indirect tax will require businesses to connect the full lifecycle. The point is not to replace determination. Accurate real-time calculation remains essential. But determination is now only the beginning of a much larger operating model.

Businesses need to determine tax accurately in real time, prove the logic and data behind each determination, defend those decisions under scrutiny and continuously improve them as regulations, business models and risk profiles change. When those capabilities are governed together as the continuous lifecycle that reflects the increasing reality of global compliance, the vicious cycle of compliance complexity becomes a virtuous cycle of control.

That is the strategic opportunity in front of enterprise leaders: to turn compliance from a series of disconnected obligations into a source of control, resilience and business confidence.

What Leaders Should Expect Next

For leaders, the mandate is clear. Compliance modernization cannot stop at automation or efficiency. It has to create a durable system of control: one that connects every decision to the data, governance and evidence required to stand behind it.

At Vertex, this is how we see the future of the category evolving. The enterprises that lead will be those that can move from calculating tax as a point-in-time requirement to governing compliance as a continuous, defensible discipline. Because in the next era of global commerce, confidence will not come from having the right answer once. It will come from being able to prove, defend and improve that answer every time it matters.

Explore how Vertex’s Decision-to-Defense approach connects tax determination, evidence, governance and audit readiness across the complete indirect tax and compliance lifecycle.

About the Research

The findings draw on the most comprehensive evidence base Vertex has assembled on the state of indirect tax and compliance: more than 2,100 senior enterprise decision-makers surveyed in 2026 across two research firms. Emerald Research Group conducted two quantitative studies — one among 402 enterprise decision-makers in the US and Germany ($150M+/€150M+ revenue; 1,000+ employees), and one among 650 enterprise decision-makers across the US and Europe ($250M+ revenue; 1,000+ employees) — each with authority over enterprise tax and compliance software. Censuswide, on behalf of Vertex, surveyed an additional 1,050 senior IT, Finance, and Tax leaders across the UK, US, France, DACH, the Nordics, and Benelux. Full methodology and question-level sourcing are available on request.