Samsung Heirs Owe An Eye-Watering $10 Billion In Tax - Accounting For Half Of Their Inheritance

Aadhya Khatri - Oct 27, 2020


Samsung Heirs Owe An Eye-Watering $10 Billion In Tax - Accounting For Half Of Their Inheritance

South Korea's 60% tax on inherited shares and 50% tax on real estate mean the heirs of Samsung could be subjected to a $10 billion tax duty

Lee Kun-hee’s heirs could have to pay billions of dollars of taxes on inheritance after his death on Sunday. However, this doesn’t necessarily mean they have to sell shares to take the control of Samsung.

According to the Bloomberg Billionaires Index, former South Korea’s wealthiest man possessed a fortune of approximately $20.7 billion with a large part of it is his stakes in four units of Samsung Empire.

Lee Kun-hee fortune
According to the Bloomberg Billionaires Index, former South Korea’s wealthiest man possessed a fortune of approximately $20.7 billion

South Korea's 60% tax on inherited shares and 50% tax on real estate mean the heirs of the Lee family could be subjected to a $10 billion tax duty.

According to the CEO of Chaebul.com – a corporate-analysis firm, it’s highly unlikely the company would sell stock to help pay the amount of tax. One of the possible ways is to increase dividends.

Screenshot 1

This is exactly what Koo Kwang-mo, current Chairman of LG Group is doing. After his father’s death in 2018, the former chairman’s family decided to pay their $817 million inheritance tax over five years.

Koo Kwang Mo
Koo Kwang-mo - current Chairman of LG Group

Samsung Electronics refused to disclose details over how the family intends to pay the tax and distribute the fortune, all it said was the inheritance tax would be paid transparently according to the law.

Lee Kun-hee’s held 4% of the world’s largest manufacturers of memory chips, smartphones, and televisions, 21% of the company that owns the second largest portion of Samsung Electronics – Samsung Life Insurance Co.

Since Lee’s heart attack in 2014, his son Jay Y. Lee became the new leader of the conglomerate.

According to Jongwoo Yoo of Korea Investment & Securities, if Jay Y. Lee inherited everything from his father, he could use family financing and dividends to pay the tax duty.

Screenshot 2

The sole male heir to the throne has been tangled in legal troubles in the last few years over a merger of two affiliates of Samsung back in 2015. After the ordeal, his control over the whole group was secured.

Jay Y Lee Indicted Samsung
The sole male heir to Samsung throne has been tangled in legal troubles in the last few years

He himself held only 1% of stakes in Samsung Electronics but after the union, he had 17% of Samsung C&T Corp, which owns 5% of the technology firm.

The final ruling on his bribery case is still processing and he is under another trial for financial-fraud charges to secure his rule over Samsung. While Lee denied all accusations, he has made a public apology for the scandals and promised not to let his own children inherit the leadership of the conglomerate.

Screenshot 3

Samsung is the latest in a series of South Korea’s conglomerates to transfer power to the next generation of the ruling family. Earlier this month, Euisun Chung was named chairman of Hyundai Motor Group, completing the change of ownership from his father to him.

>>> What The Future Holds For Samsung After Former Chairman Lee Kun-Hee's Death

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