Lee family to pay over $ 10 billion in inheritance tax
A Samsung (R) flag and a South Korean national flag fly in the company’s Seocho building in Seoul on April 28, 2021.
JUNG YEON-JE | AFP via Getty Images
SINGAPORE – The family of the late president of Samsung Electronics announced on Wednesday that they would pay a huge inheritance tax bill of more than 12 trillion Korean won (about $ 10.78 billion).
The payment of inheritance tax is one of the largest in South Korean and world history – “the equivalent of three to four times the Korean government’s total tax revenue last year,” said Lee Kun-hee’s family in a statement.
âAs provided by law, the family plans to pay all inheritance tax over a five-year period, starting in April 2021,â the Lee family said.
Lee died in October 2020 at the age of 78, after turning the Samsung Group into South Korea’s largest conglomerate. He took over the management in 1987 following the death of his father, Lee Byung-chul, founder of the conglomerate.
Yonhap said the family would likely fund the inheritance tax with stock dividends, but could also get bank loans.
The family did not disclose how the members would divide the actions of the Patriarch.
Reuters reported in October that Lee was the richest stock owner in South Korea.
His estate was valued at around $ 23.4 billion, according to Reuters, which quoted local media. Lee’s shareholding consists of 4.18% of the common stock of Samsung Electronics and 0.08% of the preferred stock, a 20.76% stake in Samsung Life Insurance, a 2.88% stake in Samsung C&T and a stake of 0.01% in Samsung SDS, Reuters reported.
The shares of these companies fell after the announcement of the tax on Wednesday. Samsung Electronics fell 0.97% and Samsung C&T fell 2.92%. Samsung SDS slipped 0.8% while Samsung Life Insurance was down 0.24%.
The family also said they would donate 1,000 billion won to medical and health causes.
“The late President Lee’s collection of antiques, Western paintings and works by Korean artists – approximately 23,000 pieces in total – will be donated to national organizations,” they said, in recognition of his passion for collection of art and “his conviction of the importance of transmitting our cultural heritage to new generations.”
south korean chaebols
Samsung is South Korea’s largest chaebol – or large family conglomerates that have historically played an important role in the country’s economic development.
These companies, which include the Hyundai Motor group and the SK group, control large networks of companies through a circular holding structure and their control generally exceeds treasury rights. This means that families often exert undue influence over group companies despite their relatively low direct participation.
Yet many citizens have demanded reforms to reduce the power of the chaebol, as concerns persist over crony capitalism.
In January, Samsung heir Jay Y. Lee was sentenced to two and a half years in prison by a South Korean court. Young Lee’s return to prison came following a retrial in a corruption case involving former President Park Geun-hye, according to Yonhap.
– CNBC’s Chery Kang and Saheli Roy Choudhury contributed to this report.