Samsung Heirs Announce Donation to Offset Inheritance Tax

  • By Lee Sung-hoon, Shin Eun-jin

    April 29, 2021 10:56

    The heirs of Samsung chairman Lee Kun-hee will donate a cache of priceless artworks to the nation as well as W1 trillion in cash for medical research to offset some of their massive inheritance tax (US$1=W1,114).

    The Lee family said Wednesday they will donate some 23,000 works of Korean and international art to public museums, including 60 national treasures.

    Lee's widow Hong Ra-hee, son Lee Jae-yong and daughters Lee Boo-jin and Lee Seo-hyun announced they have inherited W26 trillion in assets including W19 trillion in stocks in Samsung Electronics and affiliates plus real estate and art. That means the heirs owe a whopping W12 trillion in inheritance tax, which they have pledged to pay or offset over the next five years.

    Artworks from late Samsung chief Lee Kun-hee's collection

    The amount is more than the entire inheritance taxes of W10.6 trillion the government earned from 2017 to 2019. By comparison, the heirs of Apple founder Steve Jobs paid W3.4 trillion in inheritance tax in 2011.

    An inside source said the family will pay one-sixth or around W2 trillion by the end of this month and the remaining W10 trillion over the next five years. "They will pay with their own money and by borrowing from financial institutions," the source added.

    Loans and ready cash on that scale have reportedly proved hard to come by, and there were fears that the Lee family would have to sell some of their controlling stake in the publicly traded conglomerate. Lee junior was reportedly able to get a loan as he earned W125 billion in dividends from his stake in Samsung Electronics, but his siblings had to take out high-interest loans from multiple financial institutions.

    Charitable donations are tax-deductible.

    W700 billion of the cash donation will be given to the National Medical Center to open Korea's first hospital specializing in infectious diseases and to establish a state-of-the-art research center under the Korea Disease Control and Prevention Agency, while the other W300 billion will go to helping children with cancer and rare diseases and help treat around 17,000 pediatric patients.

    The art collection will be divided up between the National Museum of Korea, the National Museum of Modern and Contemporary Art and other museums outside of Seoul. The modern collection, which includes pieces by Alberto Giacometti, Francis Bacon and Mark Rothko, will be handed over to the Samsung Foundation of Culture. The combined value of the artworks is estimated at around W1 trillion.

    The National Museum of Korea plans an exhibition of the collection in June before it travels around the country.

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