The family of the late president of Samsung Electronics announced today, Wednesday, that they are settling a massive inheritance tax bill of more than 12 trillion Korean won (approximately $10.78 billion). South Korea has one of the highest inheritance tax rates in the world at 50%, the second highest after Japan. This tax issue has been closely monitored by investors as it may impact the family's stake in Samsung.
Lee Kun-hee's family stated in a press release that the inheritance tax payments are among the largest in South Korea's history and globally, equivalent to four times the total real estate tax revenue for the Korean government last year. The family added that, as stipulated by law, they plan to pay the full amount of inheritance tax—which represents more than half the value of the late president's total estate—over five years starting from April 2021, according to the Arab News Portal.
Lee Kun-hee passed away in October 2020 at the age of 78 after transforming Samsung into the largest conglomerate in South Korea. He took over leadership in 1987 after the death of his father, Lee Byung-chul, who founded the group.
According to Yonhap News Agency, the family is likely to finance the inheritance tax through stock distributions and may also take out bank loans. The family has not disclosed how they will divide the father's shares among family members. Reuters reported in October that Lee Kun-hee was the richest shareholder in South Korea, with his assets estimated at about $23.4 billion. His holdings include 4.18% of ordinary Samsung Electronics shares, 0.08% of preferred shares, 20.76% in Samsung Life Insurance, 2.88% in Samsung C&T, and 0.01% in Samsung SDS.
The family also stated that they are donating 1 trillion won to healthcare and medical causes, in addition to donating a collection of artifacts and paintings—about 23,000 pieces—to the National Museum of Korea and other cultural organizations. Samsung is the largest chaebol in South Korea—large family-run conglomerates that have historically played a significant role in the country’s economic development. These companies, which include Hyundai Motor Group and SK Group, control vast networks of businesses through a circular ownership structure that typically exceeds their direct cash flow rights. This often means that families wield undue influence over group companies despite holding relatively small direct stakes.
In January, a South Korean court sentenced Samsung heir Jay Y. Lee to two and a half years in prison.
