October 26, 2020 13:07
Samsung chief Lee Kun-hee's family will have to pay an estimated W10 trillion in inheritance taxes, which would be a record for Korea (US$1=W1,129).
According to the Financial Supervisory Service on Sunday, Lee's stock holdings were valued at W18.2 trillion at Friday's closing price. As of June this year, Lee owned 4.18 percent of Samsung Electronics including 0.08 percent of preferred shares, 20.76 percent of Samsung Life, 2.88 percent of Samsung C&T and 0.01 percent of Samsung SDS.
Heirs are liable to the maximum tax of 50 percent if they inherit more than W3 billion, and a tax rate of 60 percent is applied to heirs when the deceased was a majority shareholder of a conglomerate. That means Lee's children will have to pay around W10.9 trillion in inheritance taxes.
If they sell stocks in Samsung companies to raise the money to pay the taxes, their controlling stakes through the Byzantine holding structure that keep the publicly traded empire in family could weaken.
Instead, the current Samsung chief Lee Jae-yong and the patriarch's widow and other children could borrow money using their stocks as collateral to pay the taxes or donate some of their stocks to charity.
The corporate reforms Lee junior had been planning could gain momentum from his father's death. Lee Jae-yong said in May that he will not pass on control of Samsung to his own children.
But there are several uncertainties surrounding the inheritance process, including potential stake changes and regulations that have placed limits on equity stakes in subsidiaries of insurance companies.
Lee also awaits judgment in a trial determining the legitimacy of a dubious merger between Samsung C&T and Cheil Industries that gave him control of the conglomerate. If the merger is ruled illegal, he could face major hurdles in maintaining his hold on the corporate behemoth.
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