Q&A: EY's Marna Ricker on the promise of quantum computing for tax

The concept of quantum computing was first introduced by Richard Feynman in 1959 during his renowned lecture “There’s Plenty of Room at the Bottom.”

In this lecture, Feynman explored the idea of manipulating individual atoms to perform computations, laying the groundwork for what would eventually become quantum computing​​.

The theoretical framework was further developed by David Deutsch in 1981, who formulated the idea of a quantum Turing machine and later proposed the concept of a universal quantum computer​.

The global quantum computing market today is expected to reach $6.5 billion by 2033, driven by advances in quantum hardware, the emergence of quantum cloud services, and significant investments from governments and private companies.

Feynman and Deutsch likely never envisioned that their pioneering ideas would one day have profound applications in fields as diverse as accounting and tax – and yet, that is where we have ended up.

Quantum computing is now expected to revolutionise how tax data is processed, analysed, and secured. At the forefront of this innovation is EY, one of the world’s leading professional services firms.  In a recent interview, Marna Ricker, EY’s Global Vice Chair of Tax, shared her insights on how quantum computing will shape the future of taxation.

EY’s Quantum Computing Initiatives in the Tax Sector

EY has positioned itself at the forefront of quantum computing innovation within the tax sector. Ricker explains how the firm is spearheading advancements through strategic alliances and significant investments.

“We’ve been working with IBM as a strategic alliance, advancing quantum computing and collaborating with leading institutions and research centers,” she says. These partnerships are integral to EY’s strategy, fostering an ecosystem that accelerates quantum computing’s potential.

EY’s has committed to invest $10 billion into technology and digitalisation initiatives over the next three years, allocated to advancements including quantum computing.

The firm’s approach to quantum computing is not solitary.

“We’ve been partnering with a number of organisations and academic institutions to really accelerate the potential in this area,” says Ricker.

This collaborative ethos extends to governments and industry consortia, forming a robust network aimed at leveraging quantum computing’s capabilities.

Long-Term Vision and Planning

EY’s vision for quantum computing is not limited to short-term gains. The firm adopts a long-range planning perspective, evaluating the potential of quantum computing over 1, 3, 5, and 10-year horizons.

“We don’t think it’s that far off. We think it’s in the next 5 to 10 years,” Ricker explains, indicating EY’s proactive stance in preparing for imminent technological transformations.

Quantum computing holds the promise of revolutionising tax processes and systems, addressing longstanding challenges and introducing unprecedented efficiencies.  Ricker highlights two primary areas where quantum computing will make the most significant impact: tax administration and corporate tax planning.

Enhancing Tax Administration

On the tax administration side, quantum computing offers the ability to handle complex international tax issues and policy implementation with unparalleled precision.

“Tax administrators are trying to do good, collect taxes, and impact behaviour…the ability to predict outcomes with multiple datasets and iterations will be massive,” says Ricker.

By leveraging quantum computing, tax authorities can better anticipate the effects of policy changes, ensuring fairer taxation and more effective governance.

Better Business Decisions for Corporations on Tax Impacts (Compliance and Planning)

For corporations, quantum computing will transform how they approach tax planning and compliance.

“Companies are making big capital decisions around where to build a plant, what companies to acquire, or how to divest. The ability to do that with a quantum computer in this detailed scenario planning is massive,” Ricker explains.

Quantum computing will enable corporations to model various tax scenarios and legislative changes with greater accuracy, facilitating more informed and strategic decision-making.

Data Processing and Analysis

The explosion of data in recent years necessitates advanced computational tools to process and analyse this information effectively. Quantum computing addresses this need by offering the ability to handle vast datasets and perform complex analyses simultaneously.

“Data has increased dramatically over the last decade, and we see it doubling by the end of 2025. Quantum computing allows us to process data and scenarios simultaneously, which is a massive opportunity,” Ricker notes.

By harnessing the power of quantum computing, both tax administrators and corporations can achieve higher levels of efficiency, accuracy, and foresight in their tax-related activities.

Improving Fraud Detection and Compliance

Quantum computing offers unprecedented capabilities in detecting tax fraud and enhancing overall compliance.

“There will be an ability to verify tax audits and identify telltale signs of fraud in real time,” says Ricker.  This real-time detection is crucial in resolving disputes efficiently, benefiting both tax administrators and taxpayers.

One notable application is EY’s collaboration with Augmented Intelligence Labs, which utilises a dataset of over 4,000 known fraud entities with more than 150 variables. This collaboration has enabled EY to identify fraudulent behaviour patterns effectively.

“They knew exactly what fraud detection looked like and worked to identify the variables that indicate fraudulent behaviour,” says Ricker.

Additionally, EY has developed its own quantum tool that detects potentially suspicious fraudulent behaviour early, serving as an indicator for assurance practices and audit testing. This tool enhances the accuracy and efficiency of fraud detection, positioning EY at the forefront of quantum-enabled compliance solutions.

Quantum computing also optimises compliance procedures by processing vast datasets simultaneously. This capability allows for more accurate risk assessments and better-informed decision-making. By leveraging quantum computing, EY aims to strengthen its compliance framework, ensuring robust adherence to tax regulations.

Quantum computing’s ability to process and analyse large tax datasets in real time not only improves fraud detection but also enhances overall compliance, making tax systems more transparent and reliable.

Quantum Cryptography and Data Security

Ensuring the security and privacy of sensitive tax data is a paramount concern as quantum computing advances.

Quantum cryptography offers a promising solution by providing advanced encryption methods that are resistant to quantum attacks. “RSA encryption is quite good, but there’s going to be a whole new level of encryption needed in the context of quantum,” says Ricker.

Quantum cryptography will be essential in protecting data from potential breaches, ensuring that sensitive information remains secure even as quantum computing capabilities evolve. This aspect of quantum technology will play a critical role in maintaining trust and integrity within tax systems globally.

Challenges in Implementing Quantum Computing Solutions

Implementing quantum computing in the tax sector comes with several challenges, as outlined by Marna Ricker. The primary challenges include achieving powerful and stable quantum computers, integrating new systems with existing IT infrastructure, and transitioning to quantum-resistant encryption methods.

“We need to get to [a point of] powerful and stable quantum computing and make significant changes to existing IT infrastructure,” Ricker says.

Another significant challenge is acquiring the necessary expertise and training. EY is proactively addressing this by hiring data and technology experts and providing specialised training programs in collaboration with IBM. Ricker notes, “We’ve been focused on hiring data experts, technology experts, and STEM expertise for almost two decades now.”

EY’s approach includes initiatives like the “EY Badges” program, which awards employees with badges for completing training including in quantum computing. This program, developed with IBM, ensures that EY’s workforce is well-prepared for the integration of quantum computing technologies.

Regulatory and Ethical Considerations

Incorporating quantum computing into tax practices also involves navigating regulatory and ethical issues. Ricker highlights the importance of drawing from existing regulations in AI and cybersecurity to ensure compliance.

“We can draw from AI and cybersecurity regulations to address the regulatory and ethical issues in quantum computing,” she explains.

EY is actively contributing to the development of an ethical framework for quantum computing, ensuring that the integration of this technology adheres to ethical standards and legal requirements.

Investment and Infrastructure Development

The integration of quantum computing into tax systems requires substantial investment and infrastructure development. EY’s $10 billion investment in technology over the next three years is a testament to their commitment.

“It’s a significant investment, and you have to build that into your 1, 3, 5, and 10-year plan,” says Ricker.

Collaborations with technology leaders like IBM, Dell and National Centre of Scientific Research Demokritos play a crucial role in this development, helping EY focus on various projects, including a quantum algorithm for portfolio optimization and DNA sequencing use cases.

Practical Applications and Future Steps

Ricker is optimistic about the timeline for practical applications of quantum computing in taxation. While the original projection for widespread quantum computing adoption was 2030, Ricker believes that hybrid systems could become mainstream much sooner.

“We think hybrid systems are likely to take superiority before 2030,” she states, highlighting the rapid pace of development in this field.

EY is already live testing quantum computing applications and is taking proactive steps to integrate this technology into its operations.  “We have a fantastic group [of people] that is very clear on their path over the next three years,” says Ricker.