Lee household to pay over $10 billion inheritance tax

A Samsung flag (R) and South Korean nationwide flag flutter on the firm’s Seocho constructing in Seoul on April 28, 2021.

JUNG YEON-JE | AFP by way of Getty Photographs

SINGAPORE — The household of Samsung Electronics’ late chairman introduced Wednesday they are going to be paying off an enormous inheritance tax invoice of extra 12 trillion Korean received (about $10.78 billion).

The inheritance tax fee is likely one of the largest within the historical past of South Korea and globally — “equal to 3 to 4 instances the Korean authorities’s whole property tax income final yr,” Lee Kun-hee’s household mentioned in an announcement.

“As offered for underneath the legislation, the Household plans to pay the total quantity of the inheritance tax over a interval of 5 years, beginning in April 2021,” the household mentioned within the launch.

Lee handed away in October 2020 on the age of 78, after rising the Samsung Group into South Korea’s largest conglomerate. He took the helm in 1987 following the loss of life of his father, Lee Byung-chul, who based the conglomerate.

Yonhap reported that the household is more likely to fund the inheritance taxes with inventory dividends however might additionally get financial institution loans.

The household didn’t reveal how the members will cut up the patriarch’s stockholdings.

Reuters reported in October than Lee was the wealthiest inventory proprietor in South Korea.

His property was valued at about $23.4 billion {dollars}, in line with Reuters which cited native media. Lee’s inventory possession contains 4.18% of Samsung Electronics frequent shares and 0.08% of most popular shares, 20.76% stake in Samsung Life Insurance coverage, 2.88% stake in Samsung C&T and a 0.01% stake in Samsung SDS, reported Reuters.

Shares of these companies have been blended after information of the tax announcement on Wednesday. Samsung Electronics shed 0.72% and Samsung C&T dropped 2.92%. Samsung SDS was flat, whereas Samsung Life Insurance coverage edged 0.36% greater.

The household additionally mentioned they are going to be donating 1 trillion received to health-care and medical causes.

“The late Chairman Lee’s assortment of antiques, Western work and works by Korean artists — roughly 23,000 items in whole — might be donated to nationwide organizations,” they mentioned, in recognition of his ardour for artwork assortment and “his perception within the significance of passing on our cultural heritage to new generations.”

Samsung is South Korea’s largest chaebol — or giant, family-run conglomerates which have traditionally performed an vital position within the nation’s financial growth.

Such companies, which embody the Hyundai Motor Group and SK Group, management huge networks of corporations by means of a round holding construction and their management usually exceeds cash-flow rights. Meaning households usually wield undue affect over group corporations regardless of their comparatively small direct shareholdings.

Nonetheless, many voters have demanded reforms to curtail the facility of the chaebols as issues linger over crony capitalism.

In January, Samsung inheritor Jay Y. Lee was sentenced to 2 and a half years in jail by a South Korean court docket. The youthful Lee’s return to jail got here following a retrial of a bribery case involving former President Park Geun-hye, in line with Yonhap.

— CNBC’s Chery Kang and Saheli Roy Choudhury contributed to this report.

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