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Demi’s Basic Business Questions: What is Corporation Tax?

We often see headlines about Ireland’s low corporation tax – some are critical, others ecstatic about it. A pretty common question people have is what exactly is corporation tax, and how does the tax big corporations like Google and Facebook pay affect someone like me, the average college student. The aim of the following article is to give a bite-sized introduction to corporation tax and give some guidance on whether it is to be loved or hated.

Firstly, a definition. Corporation tax is the tax companies pay in countries they are resident in on the profit they earn from their business. In Ireland, the tax is at 12.5%, significantly lower than other countries. The average corporation tax rate in Europe is 25.3%, for example. 

Similarly to when we looked at why it is not feasible to print more money in order to combat financial crises, we are brought back to one of the fundamentals of economics – the law of demand. Generally, when something costs more money, less people want it. When something costs less, more people want it. Pretty reasonable, right?

The law of demand can easily be applied to our low corporation tax scenario. If it costs less money to make profits in Ireland (due to the low corporation tax), more corporations will want to set up here. It is argued that this is a positive phenomenon as it leads to Ireland becoming an international hub for multinational companies. Where there are increased companies, there are increased jobs. This reduces the number of skilled young people, university graduates etc. emigrating in search of work. Increased employment boosts the Irish economy and is often something to smile about. 

However, on the other side of the coin, those who are against our competitively low corporation tax level make strong arguments. They point to the profits that corporations such as Twitter and Facebook make and suggest better use for those profits, such as contributing to social welfare schemes. It is also argued that we are putting ourselves at an advantage at the expense of fellow European countries. The discrepancy between corporation tax rates is so high that it is a significant challenge for them to compete. This can be seen as unethical. 

There are numerous points to be made on either side of the debate but it is up to you decide where your opinions lie. 

If you have any more Basic Business Questions you are interested in me tackling, please do not hesitate to email me at dadenira@tcd.ie

Yours in Learning,

Demilade

Demi’s Basic Business Questions: Why Can’t We Just Print More Money?

Money makes the world go round. The converse is also true. Lack of money can make the world stop. This is the reality for many – their worlds are at a standstill because of a lack of money. Because of poverty.

Ending poverty is one of the United Nations’ Sustainable Development Goals to be achieved by 2030. According to the UN, 700 million people live in extreme poverty. Sometimes, grave situations like these cause business newbies like myself to ask the question, “Why can’t we just print more money?”. Unfortunately the solution is not that simple.

Printing more money may be a possible quick fix, but it is only sustainable temporarily. Printing more money can make poor countries even poorer in the long run.

Money is worth the value we give it. If people didn’t believe money to be valuable and accept it in exchange for goods and services, it would simply be like another piece of paper.

Inflation refers to a general increase in the price level of goods and services. This can be caused by increased money in circulation or by people’s incomes rising. The more money readily available, the easier it is to buy things and the more people will want to buy things. Businesses are profit driven and will increase their prices as people can now afford to pay more while not increasing their supply . This is the law of demand – as price increases, demand decreases. More money does not mean less problems, more money simply translates to higher prices. 

We are not the only ones who have flirted with this idea of printing more money in order to increase the standard of living. In order to fulfill the payment of reparations after the war that had made them poor, Germany in 1922 printed money. On the surface it seemed like an excellent idea. In reality, however, they could not have been more wrong. This led to hyper inflation, meaning prices were so inconceivably high that money became next to worthless. It was not uncommon for people to use their money to burn fires. 

Poverty is a pressing issue and it is imperative that we continue to generate solutions on how to tackle it. Unfortunately, money printing is not the one for us today. 

If you have any more Basic Business Questions you are interested in me tackling, please do not hesitate to email me at dadenira@tcd.ie

Yours in Learning,

Demilade

Meditree – Trinity Start-Up Tackling Administrative Inefficiencies in the Healthcare Sector

1) What do you do and how did you get started?

Abs and I were talking about how he is finding his start as a full-time doctor at the Galway University Hospital. He started mentioning a lot of bottlenecks in the workflows and how manual a lot of the document processes were. A second, more alarming factor, came from academic research experience of how hospital data quality becomes a bottleneck when trying to implement the latest technologies to healthcare domains. The data is usually either manually created or does not exist at all. This significantly inhibits innovation and improvement in the industry.

This concerned us about the future of Irish Healthcare. A nail in the coffin was figuring out that Ireland has been consistently falling in the rankings of the EuroHealth Consumer Index, currently being 22nd out of 36 countries. Worst of all, it’s the lowest of all countries in accessibility, and doing bad in several other metrics, including Patient rights and information. So we decided to combine our disciplinary knowledge (Computer Science and Medicine) to find ways of streamlining workflows for multidisciplinary teams in healthcare, all while maintaining data interoperability, reconciliation and security.

Our solution aims to provide healthcare professionals with an online platform to access, publish and collaborate on Multidisciplinary Medical Documents.

These medical records are persisted into a knowledge graph. This interconnected data allows healthcare professionals to gain further insights that they were not able to extrapolate before. Within the rampant age of big data, a solution to aid in the fundamentals of Organic Intelligence is critical, and we strongly believe that solution is MediTree. Our initial phase seeks to streamline the phlebotomist’s workflow. Meditree allows surgeons to set a recurring order for patients in need of regular blood tests. Blood test results are key in monitoring a patient’s recovery post-surgery. Meditree would then enable such requests to be sent directly to Phlebotomists, cutting out the lengthy, manual request process entirely, all while keeping a record for reconciliation and enhancing of analysis for future patients undergoing similar surgeries, e.g. Giving options of the most reasonable tests to give the current patient. Making the Records an ever-learning model.

2) Tell us about the team:

Uzair Qureshi – Masters student in TCD in Computer and Electronic Engineering. Uzair has worked at the ADAPT Research Centre as a Research Intern working on Linked Data Quality Assessment. He also worked at Mastercard Dublin as a Software Engineer, where he won their regional hackathon, the intern hackathon and filed a patent with them. He has also won JCIs Top Outstanding Young Persons 2018 and won an Innovation award from Engineers Ireland & ARUP. He has a great interest in Research and looking for domains of application for the latest advancements in technology.

Abd-Al Rehman Tahir –He finished his Doctorate from TCD Medicine, and has a breadth of knowledge in medical practices, having done rotations in several different hospitals for 3 years and now working full time as a Student Doctor at the Galway University Hospital. Mohammed Elsayed – Is a third year student at TCD Medicine with great experience in Medicine and a keen interest in Medicinal practice and research.

3) How far along your business plan are you now?

We are starting off with our research phase where we establish credibility in our solution and knowledge of the problem. This is being done through writing short articles highlighting the current plight of healthcare management and how we aim to solve it. We are currently working on writing a white paper on Data Interoperability Issues in Multidisciplinary Teams within Irish Healthcare.

4) Plans for the future?

We hope to become a trusted academic and research entity that would be working in unison with the Government Sector (using data to highlight and optimize usage of healthcare resources) , Hospitals (Helping healthcare professionals streamline their workflow by cutting manual processes and enhancing organic intelligence) and Academic Institutes (mediating the data for purposes of academic research which aims to enhance healthcare for the future ). Potential challenges run into HSE, and how to manage the integration process efficiently, we are learning more and more with how other programs are being initiated into hospitals.

Commercial Law’s Fear of Electrocution – An Analysis of the Law’s Reluctance to be Energetic in Deeming Energy as a “Good”. Is Change a “Good” Idea?

By Luke Gibbons

It is unquestionable that commercial entities, would not function without energy supply. Further, as Bridge outlines, “there is no doubt that energy…[can be] bought and sold”. (Benjamin’s Sale of Goods,9th.edn.2014). Thus, the fact the judiciary and legislator have failed to clarify whether such constitute “goods” under the Sale of Goods and Supply of Services Act 1980, and therefore, accrue heightened remedial availability than “services”, while providing no definition of “services”, and as White states, no principled reason why this protectionism to goods exists, is abhorrent.(White,Commercial Law,2nd.edn.2012).

It is regrettable that a definition requiring tangibility, from a period when energy was not paramount is stifling jurisprudential and legislative development, as “there are …difficulties attributing to energy … legal qualities of… physical objects”.(n1) Consequently, a multijurisdictional solution has developed, distinguishing “bottled” from “flowing” energy, as held in Bradshaw v Bothe’s Marine[1973]35.DLR.(3d)43, with the former being deemed “goods”. Although unfavourable in an already uncertainty area, it is submitted, such may be necessary. This is contended as Part IV of the 1980 Act only implies “terms” akin to “conditions” implied to sale contracts, if a contract is held to be for supply of services, and following Carroll v An Post National Lottery[1996]1I.R 433, a narrow view of  such is proffered. Thus, one contends, if this distinction was not held, there would arguably be no protection for commercial entities who buy “bottled” energy, as such may not be deemed a service, and also, not be subject to the proposed Consumer Rights Bill 2015.

Further, it is argued, the definition’s impact is exacerbated, as energy is considered a “good” in many Statutes such as, the Consumer Protection Act 2007. In spite of such, one must question, to remedy this arbitrary distinction, is it feasible for energy in general to be deemed a “good” under the 1980 Act, now that “services” are offered protections?

It is arguable, the dearth of cases may warrant maintaining the status quo. Furthermore, it is contended, if energy constituted a “good”, s.35 may be invoked, deeming acceptance by “use”, being an act inconsistent with the seller’s ownership. However, it is noted, as such is expressly subject to s.34(1) allowing for reasonable inspection, and as such allows operation, subsequent to Benstein v Pamson Motors Ltd[1987]2.All.ER.220, the “use” of energy uncovering a “latent defect” for instance, may give rise to more favourable remedies to “buyers”.

Nevertheless, a determination that energy is a “good” may arguably detrimentally effect remedial availability. Currently, in energy being a “service”, implied terms are “innominate terms”, warranting damages or termination depending on the breach’s seriousness, as denoted from Hongkong Fir Shipping v Kaawasaki Kisen Ltd[1962]2Q.B..26. However, it is contended, if deemed a “good”, claims would likely be made under s.11(3) of the 1893 Act, arguing; if some energy was consumed prior to rejection, a partial rejection occurred, and thus, implied conditions would be converted into warranties, with damages being the only remedy. Further, although White requests allowance of partial rejection as in the UK, it is argued, such would not assist as energy would likely be subject to the “commercial unit” exception. Thus, the only solution to this quandary may be “freedom of contract” in allowing such, although as monopolised energy suppliers are often the dominant party, this seems unlikely.

Furthermore, retention of title clauses are hallmarks of sales contracts, as such provide remedies for sellers, when “goods” are sold on credit. Although, White contends such are common where “goods” are consumed before credit periods end, the recent case of PST Energy v OW Bunker Ltd[2016]UKSC23 held, in relation to fuel, one cannot obtain title to something that no longer exists, so it cannot be a transaction with such at its heart. Thus, it is argued, in undermining a key remedy when buyers become insolvent, and a foundation of credit arrangements, this holding encapsulates why deeming energy as “goods” is unworkable.

It is submitted, due to the difficulties outlined, the Sales Law Review Group’s recommendation to hold implied terms for services as “conditions” in legislation should be adopted. Although, it is noted, this may not fully remedy the remedial deficit offered to “services”, such would allow commercial users of differing energy forms, seek relatively equal remedies bringing some homogeneity to the law.

Do Commercial Lawyers Need To Get Smart?

By Jack Savage

Advances in technology are affecting all aspects of business. It is has created significant developments in productivity, efficiency, and innovation. Inevitably, the question must be asked as to whether new technologies should be integrated into the relationship between law and business. Law and particularly contract law plays a foundational role in all business transactions. Can smart contracts enhance current legal practice, does the potential to remove third parties from contracting individuals exist and at what cost?

What is a Smart Contract?

A smart contract is a self-executing, self-enforcing, blockchain contract in digital form. The agreement is written in code across a distributed, decentralised blockchain network. Transactions are transparent, traceable and irreversible.

How does it work?

The agreement is written in code across a distributed, decentralised blockchain network. Both lawyers and programmers are required to create a smart contract. “Logic 1 ” is input to the code, which then acts in a pre-defined manner. The contract operates based upon IF THEN Conditional Computer Programming Statements.

How do you enter a Smart Contract?

An encrypted code is sent to the other parties through a distributed network of ledgers (a “DLT”). The code is received by computers in the DLT and individually make an agreement on the results of the code of execution. The agreement is self-executed and recorded as the network updates the DLT. The execution is not controlled by an individual party and cannot be independently modified.

Potential Benefits

Efficiency and reliability are increased substantially when a process is automated and the need for a human input is removed. Eliminating the intermediary significantly reduces transactional costs.

Limitations

Although some contracts can be expressed by computers, limitations exist when performance is dependent on a subjective standard. Smart contracts are not effective at expressing or construing non-binary clauses such are “satisfaction” and “reasonable effort” clauses, which are a regular and necessary feature of contracts. These clauses allow scope for the unexpected. When such an intention is expressed in a self-executing smart contract the intention of the parties may not be realised. A smart contract can only be understood literally, an interpretative approach seeking to capture the “intent of the contract” is not possible. A human element allows the flexibility needed to capture human intention.

Shortcomings

A more technical point is the requirement of certainty of terms for a contract to be legally binding. It is not possible to identify the legal parties in an agreement in a smart contract. Smart contracts use public addresses (“Address”), which directs to a wallet, to form the agreement. Information extrinsic to the agreement is required to identify the parties. Smart contracts can participate with other smart transactions. This means that the address may direct to another smart contract. This creates a multi-wallet address controlled by various addresses. This multi-wallet address can then enter contract itself. Therefore, it is not possible to definitively state that a certain public address relates to a wallet and a particular owner.

Smart contracts are unable to access information outside of the blockchain. Information is verified and sent by Oracles. However, centralised oracles are vulnerable to being hacked as they are single points of failure. Oracles can malfunction and feed false information to the blockchain. Congestion can result in transaction delays. Although these risks can be mitigated by decentralisation, it is impossible to eliminate them. As smart contracts become more complex the inherent risks increase.

Opportunity

Smart contracts will disrupt a number of existing industries that exist in different regulatory frameworks. A consequence of this disruption will inevitably be the need for legal advice on regulatory compliance. Smart contracts will require legal counsel to ensure that any projects stay within the applicable regulatory parameters across the jurisdictions in which it operates.

The Future of Law

It is unlikely smart contracts will replace written contracts due to their inherent limitations and current shortcomings. However, smart contracts offer a number of clear advantages to written contracts. It is likely that a hybrid model smart contract which acts in tandem with written contracts will prevail. In the future lawyers may learn how to code smart contracts in order to draft both elements of agreements. Presently, it is likely that products and services will develop facilitating lawyers to draft enhanced agreements using both legal expertise and blockchain.

Blockchain eventually may provide a secure, efficient and fast platform for storing, accessing, and authenticating data, in addition to streamlining labour intensive legal processes like discovery.

Whilst Smart Contract and blockchain may change how law is currently practiced what resources are allocated. It is likely that the legal practice will be enhanced rather than diminished.

Importance of Diversity and Inclusion in the workplace

By Andrés Soto Ramos

Key Points:

  • Importance of diversity in the workplace
  • Diversity and inclusion?
  • Healthier organisational climate:
  • Prevents knowledge inbreeding
  • Enhances employee engagement
  • Encourages open communication

Enough has been said about the importance of diversity and inclusion in the workplace. In the digital era that we live in, organizations are under heavy scrutiny of society and can face severe brand image damages if they are caught not following inclusive practices.

We can see an example of this in how U.S. companies have been quick to dismiss any situation in which racial profiling or any kind of abuse to minorities has taken place in their establishments, that are often resulting in the termination of the employee that caused the issue. But business should not advocate for inclusiveness only because it is what our society expect, they should also consider the positive impact in the bottom line of fostering diversity and inclusion within their organisations.

What exactly is diversity and inclusion? These two words are often (wrongly) used as synonyms in advertising or company communications, but it is important to remember that they do not have the same meaning. Instead of going into the dictionary definition of each, we can explain these with a simple metaphor that has proven useful to clarify this subject in corporate environments; diversity means that everyone is invited to the party, and inclusion means that everyone will also be invited to dance. Therefore, diversity an inclusion (D&I) in the workplace translates to building a talent pool of individuals from different background, gender, age, creed, race, ethnicity, sexual orientation, languages, education, etc; and to nurture an environment in which everyone feels safety in sharing their opinions and that allows them to have access to the same growth opportunities.

While this feels again as an overly romanticised definition that companies can use as a sales pitch, organisations that adopt D&I practices are bound to reap on a wider and more valuable set of benefits that come from a healthier organisational climate:

Prevents knowledge inbreeding

Just as the organisms in an ecosystem have higher disposition to a set of diseases when they share a common gene-pool, organisations that hire and promote individuals from similar backgrounds to management positions are prone to adopt ideas within an identical line of thought, therefore reducing the chance of bad ideas being scrutinised and discussed, and limiting the innovating output.

Enhances employee engagement

Companies around the world invest millions of dollars per year in workshops and teambuilding activities to promote employee satisfaction. But since most modern workers will spend at least a third of their day in their workplaces. Satisfaction and engagement can be also improved by fostering a safe climate in which different opinions are respected and equally taken into consideration. Individuals will show higher attachment towards organisations that genuinely value their contributions.

Encourages open communication

Companies with a diverse workforce that is empowered to openly communicate and share their opinions are most likely to display efficient conflict resolution within their work groups. As well as better problem-solving techniques due to the flexibility that comes with open-mindedness and respect for others’ opinions. In opposition, individuals that feel threatened or judged will refrain from communicating the issues they perceive in their companies due to the fear of being prosecuted by their peers. Consulting data and reports on diversity and inclusion have consistently proven a strong correlation between better financial performance and the adoption of D&I practices. Individuals and managers must not ignore this evidence and advocate for inclusive companies not just because of the positive advertising that can be generated because of this, or simply to follow what can be considered a trend in modern human resources practices. Building a truly inclusive workplace can become a real competitive advantage for organisations, with a direct impact in their climate and overall company performance.

Impact Investing: The Way Ahead?

By Abigail Fernandes

On September 20th and 27th , millions of people took to the streets to strike for climate action. This mass protest was a way of expressing a public sentiment that “Business as usual is no longer an option”. However, Charities and Governments around the world do not have enough capital to meet the challenges faced by the environment. Where then can we find enough capital to help the government tackle this issue? One of the best solutions to this ever-existing crisis is “Impact Investing’. The term was coined more than a decade ago but begun to gain momentum only since the last year. It refers to an agreement entered into by entrepreneurs, companies, organisations and philanthropists to invest in markets that create a social or environmental impact and generate returns. This in turn creates a win-win situation for the environment and the investors at large.

Why Impact Investing Now?

The benefits of Impact Investing are manifold. The future of human beings and the environment are interdependent. The temperatures of our planet are rising, and the icebergs are melting and the on area that is bound to get impacted is our ‘Big Businesses’. As rational beings we need to have a strong compulsion to protect our dying planet that has so much to offer. Impact Investing ensures that businesses are held accountable for the activities undertaken. Institutional Investors can see to it that the companies that they invest in are minimising risks and maximising opportunities that are presented by climate change. Thus, enabling a cleaner and greener environment. Investing in sectors like solar energy and wind power can put an end to the use of fossil fuels and help companies find new efficient ways of meeting the energy needs of the society. A greener future can be good not only for the planet that we live in but also to our wallets. A 2018 study by GIIN found that more than 90% of impact investors reported that their investments were meeting or surpassing their projections.

Growth Avenues for Impact Investing

With the growth of Impact Investments rapidly increasing, some of the best options for impact investing are iShares Global Clean Energy ETF, First Trust ISE Global Wind Energy Index Fund, Gree Mutual Funds like Amundi, Calvert Green Bond Fund, Brown Advisory Sustainable Growth Fund. These investments have a proven track record of positive returns while being beneficial to the society. The growth in these avenues is only going to increase as people now have the option of investing in hedge funds, private foundations, banks, pension funds, and other fund managers. Another way of investing is by adding a Donor Advised Fund (DAF) to one’s impact strategy. An investor gets a multiplier effect on his investments while investing in a DAF. The Fund invests only in companies that create a social impact and then those investments give back up to two to five percent returns to the DAF.

The US municipal finance sector is need of environmental impact bonds as climate change has become very important to protect their community from the bad effects of climate changes. Environmental impact bonds offer a solution to this problem. These securities are municipal bonds that transfer a portion of the risk involved with implementing climate adaptation or mitigation projects from the public agency on to the bondholder.

A good example for this is quoted from an article in The Harvard Business Review regarding a $25 million bond issued by the municipal water board in Washington, D.C. in 2016.The water board used the bond to fund the construction of green infrastructure to manage stormwater runoff and improve water quality. The return to investors is linked to the performance of the funded infrastructure, which allows DC Water to hedge a portion of the risk associated with both constructing green infrastructure and, once it’s in place, how well it works. Investors receive a standard 3.43 percent semi-annual coupon payment throughout the term of the tax-exempt bond. Towards the end of a five-year term – at the mandatory tender date – the reduction in stormwater runoff resulting from the green infrastructure is used to calculate and assign an additional payment If the results are strong (defined in three tiers; tier 1 being best performance) the investors receive an additional payment ($3.3 million) – bringing their interest rate effectively to 5.8 percent. If the results are as expected, there is no additional payment. And if the infrastructure underperforms, the investors owe a payment to DC Water ($3.3 million) – bringing the interest rate to 0.8 percent.

The Verdict

Impact Investing is and will be the future. However, investors should choose not to invest in companies that have a negative impact on the environment. The more investors give importance to impact investing, the better companies with a mission of environmental sustainability will perform. Hopefully this should encourage more and more environmental conscious investors to grow their investments and improve the world in one motion. Thus, rewarding businesses for their commitment to a higher calling.

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