When inheritance tax is paid in installments, 1.8 trillion won per year for 5 years … Affiliates will extend dividends to raise financial resources



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◆ President Lee Kun-hee’s death / inheritance tax payment scenario of 11 billion ◆

With the death of Samsung Group Chairman Lee Kun-hee, the tax owed by immediate family heirs such as Samsung Electronics Vice Chairman Lee Jae-yong is expected to exceed 10 trillion won. Even if the annuity payment system, which pays inheritance tax separately, will require nearly 1.8 trillion won of inheritance resources each year, the settlement of the inheritance tax is expected to be the most pressing issue for homeowners. from Samsung.

According to the trading and securities firms on the 26th, the total inheritance tax owed by the third generation of Samsung Group owners, including Vice President Lee, is expected to amount to around 1.0600 trillion won. According to the Financial Supervision Service, President Lee’s stock valuation is approximately 1.82 trillion won.

As of the end of June this year, President Lee owns 249.27 million shares of Samsung Electronics (4.18% stake), 610,900 shares of preferred shares of Samsung Electronics (0.08%), 9701 shares of Samsung SDS (0.01%) and 5.25.5733 shares of Samsung C&T (2.88%). ), Samsung Life Insurance 4151.9180 shares (20.76%). According to the inheritance tax statute, if the inheritance amount in shares exceeds 3 billion won, the maximum tax rate of 50% applies. At this time, if the successor is the largest shareholder or related person, a 20% premium will be added to the assessment amount. President Lee is the largest shareholder of these four subsidiaries or a person specially related to the largest shareholder, and they are all eligible for the largest shareholder premium under inheritance tax law.

If a 20% premium is added to the valuation amount of 1.820 trillion won, the tax rate is multiplied by the 50% tax rate and a 3% deduction is applied based on the voluntary declaration, the total inheritance tax of shares amounts to approximately 1.06 billion won. Since the stock valuation, which is based on inheritance tax, is calculated based on the average closing price for a total of four months, two months before and after death, the actual amount of tax may vary according to the flow of the stock price over the next two months.

In the end, it seems that Samsung owners will have to find an optimal solution to solve the inheritance tax that exceeds 10 trillion won. Each heir pays the percentage of the total inheritance tax. The deadline for filing and paying inheritance tax is until the end of April next year. If you use the annuity plan, you can pay one-sixth of the amount in the first year by applying 1.8% annual interest and then pay the remaining inheritance tax in installments over five years. LG Group Chairman Koo Kwang-mo is also using the annuity pension system to pay 9,215 billion won in inheritance taxes on property inherited from his father, the late Chairman Koo Bon-moo. If the heirs divide the inheritance tax of more than 10 trillion won over five years, it is expected that about 1.8 trillion won of financial resources will be needed each year. Key to these is the direction of the 15 trillion won stake in Samsung Electronics. In the business world and the stock market, a plan to donate to Samsung C&T, a plan to contribute to a public interest corporation, and a plan to inherit directly to the owner’s third generation are discussed.

The most promising option is to directly inherit the owners of the third generation. There is also the view that the possibility of realization is apparently low because the value of the shares held by the three existing generations is insufficient compared to the expected inheritance tax, which requires financing. However, there is an analysis that it is most likely preferred because it is the least controversial in the stock inheritance process. In the stock market, there is also the possibility that the third generation of the owner will raise financial resources due to the increase in dividends from Samsung Life Insurance.

One of the next most promising options is to donate Lee’s stake in Samsung Electronics to Samsung C&T. Currently, the Samsung Group has a governance structure of the owner family → Samsung C&T → Samsung Life → Samsung Electronics → other subsidiaries. If a stake is donated to Samsung C&T, its direct control over Samsung Electronics will be weakened, but it will retain its control over Samsung C&T, the core of its governance structure.

The tax burden on the owning family can also be reduced. The gift of Samsung Electronics shares to Samsung C&T is a transaction with a specific corporation (a corporation with a 30% or more interest directly or indirectly in the hands of the controlling shareholder and their family members) under the Bonds and Taxes Act. donations. At this time, the profits obtained by the shareholders of this specific corporation are the basis for taxation, and the profit is calculated by taking the equity index share in the amount that is deducted from the corporate income tax from the corporate profit, therefore It is analyzed that the burden will be less than that of direct inheritance. However, there is also a concern that noise such as the reaction of shareholders will be produced in this process.

The inheritance method using some public interest corporations is also discussed, but it is unlikely. This is because in 2015, Vice President Lee announced that he would not deviate from the estate through the actions of the foundation. It is analyzed that if the inherited property is contributed to a public interest company, the inheritance tax can be partially reduced according to the provision that the value of the property is not included in the taxable value of the inheritance tax. At this time, the upper limit of ownership of the public interest foundation is 5%, but the Samsung Group public interest corporation is designated as a sincere public interest corporation, and it is expected that up to 10% of the total number of issued shares may be excluded from inheritance tax.

Vice President Lee became President of the Samsung Cultural Foundation and Samsung Life Public Interest Foundation in 2015, and is currently President of the Samsung Life Insurance Public Interest Foundation.

There is also the expectation that he will sell a portion of Samsung Electronics shares to finance the inheritance tax. This is because the participation in Samsung Electronics of affiliates and affiliates within the group is greater than the voting rights. According to the Fair Trade Law, the exercise of voting rights over the shares of national subsidiaries held by financial and insurance companies that belong to large business groups is limited to 15%. Currently, Samsung Life and other groups’ stakes in Samsung Electronics are 20.9% and voting rights cannot be exercised over the 5.9% stake.

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