How does the Samsung family handle the $ 10 billion inheritance tax?

Follow Bloomberg Billionaires IndexLee Kunhee, the late president of Samsung, the richest man in South Korea, has an estimated net worth of $ 20.7 billion, of which the majority are stakes in four Samsung companies.

Korean law stipulates that inheritance tax can be up to 60% for shares inherited from major shareholders and 50% for real estate and other assets. Therefore, Mr. Lee’s family may have to pay around $ 10 billion in taxes. This is possibly the highest inheritance tax paid in Korea.

According to Chung Sun-sup, CEO of the Seoul-based business analysis firm Chaebul, it is unlikely that Samsung’s heirs will sell shares to pay these fees. Yesterday (October 26), rumors suggested that Samsung Group companies would increase dividends to help this family pay inheritance tax.

“Selling shares could be problematic because it would reduce the Lee family’s control over Samsung Group. No family does that, “Chung said, adding,” Instead, most choose to pay in cash for 5 years. The cash can come from sources like dividends or salaries ”.

This is also how LG Group Chairman Koo Kwang-mo did when he took over LG Group in 2018 after the death of his father. Mr. Koo and his family members have to pay an inheritance tax of up to 921.5 billion won (equivalent to $ 817 million) over five years.

Meanwhile, Samsung Electronics Group declined to comment on how the family plans to pay off and divide the assets. “All inheritance related taxes will be paid transparently as required by law,” they said.

Lee has a 4% stake in Samsung Electronics, the world’s largest maker of smartphones, televisions and memory chips, and a 21% stake in Samsung Life Insurance, which holds the world’s second-largest stake. Samsung Electronics.

Lee’s only son, Jay Y. Lee, has led the group since Lee suffered a heart attack in 2014.

According to Jongwoo Yoo, analyst at Korea Investment & Securities: If you inherit all the assets of the late Samsung chairman in Samsung Electronics and Samsung Life Insurance, Jay Y. Lee can use members’ dividends and money. family members to pay taxes.

“It is currently unclear how much cash this family has, but the dividend income may not be enough to pay this tax,” noted Mr. Yoo, saying, “Therefore, there is also a high possibility that this family will depend on personal finances ”.

Jay Y. Lee currently owns less than 1% stake in Samsung Electronics, but through the joint venture, he owns a 17% stake in Samsung C&T, which owns a 5% stake in Samsung Electronics.

Samsung is the latest among a growing number of family groups in Korea to hand over operations to the next generation.

Earlier this month, Hyundai Motor Corporation appointed Euisun Chung as president in a move to complete the acquisition of all of his father’s major titles.

According to Chung, the heirs will need to demonstrate how they can bring change to the corporation. Due to the past few years, so-called chaebols in Korea have often been fired after a series of corruption scandals.

“Therefore, it is important to see how the Sangsung family will deal with this issue of inheritance,” Chung said.

Update spirituality

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