Samsung family offloads 2,000 billion W of shares to pay inheritance tax

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Samsung family offloads 2,000 billion W of shares to pay inheritance tax

The late Samsung Electronics President Lee Kun-hee, center, with family members at the Consumer Electronics Show held in Las Vegas in 2010. Courtesy of Samsung Group
The late Samsung Electronics President Lee Kun-hee, center, with family members at the Consumer Electronics Show held in Las Vegas in 2010. Courtesy of Samsung Group


By Baek Byung-yeul

Notoriously high inheritance taxes in Korea have forced the heirs of late Samsung Chairman Lee Kun-hee to sell shares in Samsung subsidiaries worth around 2,000 billion won (1.67 billion won). dollars) to meet their tax obligations.

Hong Ra-hee, the late president’s widow, told the Financial Supervisory Service (FSS) on October 5 that she planned to sell 19.9 million shares of Samsung Electronics. The shares represent 0.33% of the company’s total shares and have an estimated value of 1.4 trillion won. With the sale, Hong’s shares in Samsung Electronics will be reduced to 1.97%.

Hotel Shilla CEO Lee Boo-jin, one of the late president’s daughters, announced plans to sell 1.59 million shares of Samsung SDS, worth 242.2 billion of won; while Lee Seo-hyun, his other daughter, and head of the Samsung Welfare Foundation, will sell 3.45 million shares of Samsung Life Insurance and 1.5 million shares of Samsung SDS.

They signed a trust agreement with KB Kookmin Bank which will run until April 25. Hong’s only son and vice president of Samsung Electronics, Lee Jae-yong, did not sign the contract.

Industry officials have said the sale of stakes in the group’s subsidiaries is seen as a measure of the heirs’ willingness to pay inheritance tax faithfully in accordance with the law, as originally promised. But they added that the divestiture of the shares could be a short-term burden on Samsung subsidiaries.

Under the law in force here, the maximum inheritance tax rate of 50 percent is applied when property over 3 billion won ($ 2.5 million) is inherited. If the deceased is a significant shareholder of a large corporation, the rate rises to 60%, more than double the average inheritance tax rate of 25.3% among member countries of the Organization for Cooperation and Development. economic development.

The president passed away last October, leaving behind 19 trillion won in stock, plus an estimated 3 trillion won in artwork and real estate. His heirs are expected to elect to pay the inheritance tax over a five-year period after making an initial payment of one-sixth of the total due, or about 2,000 billion won.

Korea’s high inheritance tax rate places a heavy burden not only on families who own large companies, but also on the general public. In this regard, Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki said the government is closely examining whether the current system needs to be changed.

“We are going to check the whole inheritance tax system and see what improvements can be made,” Hong said during a National Assembly audit on Oct. 6, when asked if the government was planning to introduce the tax system on the acquisition of inherited property.

The inherited property acquisition tax system can reduce the burden on heirs as it is a tax imposed on their individual acquisition of inheritance, and not on all of the property bequeathed by the deceased.


















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