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Inheritance tax of 11.366 billion won on shares of late President Kun-hee Lee
According to the business community and the Korean Stock Exchange on the 22nd, the total valuation of inheritance tax shares on the shares held by the late Chairman Lee Kun-hee based on the closing price of the day was 22 trillion won. . In accordance with article 63 of the Inheritance Tax Law, the valuation of the shares is determined by calculating the price of the shares for a total of four months, two months before and after October 25, the date of the deceased’s death.
Consequently, the average value for four months from August 24 to December 22 is △ Samsung Electronics 62,394 won △ Samsung Electronics (right) 56,697 won △ Samsung SDS 170,048 won △ Samsung C&T 11,4681 won △ Samsung Life is 6,276 won. The late chairman Lee Kun-hee owns 249,273,200 shares of Samsung Electronics (4.18% stake) and 610,900 shares of Samsung Electronics (right) (0.08% stake). In addition, Samsung Life Insurance has 41,151 million shares (20.76%), Samsung C&T 5,27,733 shares (2.88%) and Samsung SDS 9701 shares (0.01%).
The average valuation of the shares calculated with this in mind is 18,963.2 million won.
If the largest shareholder premium rate of 20%, the maximum tax rate of 50% and the deduction rate of voluntary declaration of 3% are applied sequentially to the value of the share, the final inheritance tax is 11,366 one billion won. The estimated inheritance tax for the shares, calculated on the basis of the closing price at the time of death, increased by KRW 400 billion from KRW 10 trillion. This is because the value of the stock increased by 700 billion won due to the increase in the share price after death.
Vice President Lee and his grieving families are expected to add at least KRW 1 trillion in inheritance taxes on real estate, artwork, bonds and cash, such as Everland’s land in Yongin, Gyeonggi-do, and his home. in Hannam-dong, Seoul. Altogether, it is expected to exceed 12 trillion won, the largest of all time.
Vice President Lee Jae-yong, etc. Five-year payment and sale of affiliate shares
The inheritance tax is applied immediately from the day following the calculation of the average price of the shares, and if the succession rate has not been determined for each of the first classified objectives, the tax is collected in accordance with legal regulations of successions. President Lee Kun-hee’s legal heirs are his spouse Hong Ra-hee, former director of the Leeum Art Museum, his son Lee Jae-yong, vice president of Samsung Electronics, his daughter Lee Bu-jin, president of Hotel Shilla, and Lee Seo-hyun, president of the Samsung Welfare Foundation. . However, considering the succession of the Samsung Group and the double payment of inheritance tax in the future, experts predict that children like Vice President Lee Jae-yong, not Ms. Hong Ra-hee, are likely to inherit many shares. .
In the industry, the Samsung family is expected to use the annuity payment system. The annuity payment is a method of paying the amount of “one sixth” of the total inheritance tax first and then applying 1.8% annual interest to pay the remaining five sixths for five years from the date of authorization of the the annuity. Even if you pay in installments, you must pay at least 2 trillion won every year. The Samsung family is also known to be struggling to raise financial resources to pay huge taxes. The most promising method is to obtain loans by securing shares of affiliates owned by the debtors or by selling some of them. Securities companies believe they can sell Samsung Life Insurance (20.76%) owned by President Lee Kun-hee or Samsung SDS (9.2%) owned by Vice President Lee Jae-yong. In the case of Samsung SDS, Samsung Electronics and Samsung C&T own 22.58% and 17.08%, respectively, so there is no problem in exercising management rights through a circular structure. In particular, Samsung SDS is considered the most promising target for sale as it falls under the group’s governance structure and there have been concerns, such as tightening of regulations by the government for ‘work sharing’.
Some speculate that the inheritance tax will be financed by expanding affiliate dividends, but the industry explains that the possibility of realization is not high. Samsung Electronics plans to finalize a new dividend scale and additional return plan in January next year, as the recent three-year dividend policy is completed this year. An industry official said: “If a special dividend is paid to Samsung Electronics, President Lee Kun-hee’s stake could be higher than Vice President Lee Jae-yong’s, which would increase the inheritance tax.”
A Samsung official said: “Since the deadline for filing and paying inheritance tax is until the end of April next year, we will consider various alternatives.”
