https://asia.nikkei.com/Business/Te...1&pub_date=20210428190000&seq_num=10&si=44594
Samsung Lee clan to pay nearly $11bn inheritance tax over 5 years
But stock distribution -- key to control of huge conglomerate -- not announced
The family that controls Samsung says it will pay nearly $11 billion in inheritance taxes on the estate of late Chairman Lee Kun-hee. ©Reuters
KIM JAEWON, Nikkei staff writerApril 28, 2021 11:00 JSTUpdated on April 28, 2021 15:45 JST
SEOUL -- The family of late Samsung Electronics Chairman Lee Kun-hee announced on Wednesday that it will pay inheritance taxes totaling more than 12 trillion won ($10.8 billion), though refrained from saying how his stock holdings will be divided up -- key to its control of the broader conglomerate.
In a statement, the family -- his widow and three children including jailed Samsung Vice Chairman Lee Jae-yong -- said taxes on the estate will be paid in six installments over a five-year period starting this month.
"It is our civic duty and responsibility to pay all taxes," the family said in the release, which came ahead of a Friday deadline to voluntarily resolve the issue.
Lee Kun-hee, who was credited with turning Samsung Electronics into a global technology powerhouse, died in October last year at the age of 78 after long being unwell.
Speculation has centered on how his heirs -- in particular Lee Jae-yong -- would pay the taxes and also how the wealth and shareholdings would be distributed among them to ensure that they maintain their grip on the empire of 59 companies that comprise the Samsung Group. The conglomerate's interests range from electronics and construction to shipbuilding, biopharmaceuticals and insurance.
The family said that the taxes to be paid are on Lee's shareholdings in Samsung Electronics, Samsung Life Insurance and Samsung C&T, along with his real estate properties. It said the payment amounts to more than half the value of Lee's total estate.
But the statement did not discuss the distribution of the inheritance among the family members.
A source familiar with the matter said that there is a possibility that it has not yet been finalized.
"The family can pay the tax together at the moment, and then they can calculate each other's share later," the source, asking not to be named, told Nikkei Asia.
The source also said that the Lee family will use its bank deposits and money borrowed from financial institutions to pay the tax.
"The inheritance tax payment is one of the largest ever in [South] Korea and globally, equivalent to three to four times the [South] Korean government's total estate tax revenue last year," the statement said.
Lee Kun-hee long controlled Samsung Group through a complex web of so-called circular shareholdings. He owned a 4.18% stake in Samsung Electronics -- the conglomerate's core -- as well as 20.76% of Samsung Life Insurance and 2.88% of Samsung C&T, its construction unit and de facto holding company.
Shares in Samsung Electronics closed 0.97% lower at 82,100 won.
The family also said it will donate Lee's vast collection of Korean and Western art to South Korean museums. Experts have said that donated works are not subject to inheritance taxes in South Korea.
Lee's art holdings totaled more than 23,000 pieces, the family said, and include works by Pablo Picasso, Marc Chagall, Paul Gauguin, Claude Monet, Joan Miro and Salvador Dali.
The family also said that it will donate 1 trillion won for health initiatives including vaccine and infectious disease treatment research as well as assisting with the medical expenses of children suffering from cancer and rare diseases.
Activists welcomed the donation of artworks, but said that should not be used as an excuse for Lee Jae-yong, who is serving a two-and-a-half year prison term for bribery and embezzlement, to receive a presidential pardon.
"There are some positive elements in the inheritance tax payment and donation, but they need to know that they should not use this as a way for Lee Jae-yong to receive a pardon," the Citizens' Coalition for Economic Justice, an activist group, said, insisting that the family should reveal details of how the stocks and real estate are to be distributed.
Some corporate leaders and opposition politicians have been asking President Moon Jae-in to bestow an amnesty on Lee for the sake of South Korea's economy, of which the Samsung Group is a pillar. Top business executives made the same request this month to Finance Minister Hong Nam-ki, who promised to relay it to the relevant government ministry.
The presidential Blue House issued no immediate reaction to the inheritance announcement. A high-ranking official there said on Tuesday, however, that it was not considering such a pardon.
Culture Minister Hwang Hee in a statement praised the Lee family for the donation of the art, saying it will help the country preserve cultural assets as well as allow people to enjoy them.
Samsung Lee clan to pay nearly $11bn inheritance tax over 5 years
But stock distribution -- key to control of huge conglomerate -- not announced
The family that controls Samsung says it will pay nearly $11 billion in inheritance taxes on the estate of late Chairman Lee Kun-hee. ©Reuters
KIM JAEWON, Nikkei staff writerApril 28, 2021 11:00 JSTUpdated on April 28, 2021 15:45 JST
SEOUL -- The family of late Samsung Electronics Chairman Lee Kun-hee announced on Wednesday that it will pay inheritance taxes totaling more than 12 trillion won ($10.8 billion), though refrained from saying how his stock holdings will be divided up -- key to its control of the broader conglomerate.
In a statement, the family -- his widow and three children including jailed Samsung Vice Chairman Lee Jae-yong -- said taxes on the estate will be paid in six installments over a five-year period starting this month.
"It is our civic duty and responsibility to pay all taxes," the family said in the release, which came ahead of a Friday deadline to voluntarily resolve the issue.
Lee Kun-hee, who was credited with turning Samsung Electronics into a global technology powerhouse, died in October last year at the age of 78 after long being unwell.
Speculation has centered on how his heirs -- in particular Lee Jae-yong -- would pay the taxes and also how the wealth and shareholdings would be distributed among them to ensure that they maintain their grip on the empire of 59 companies that comprise the Samsung Group. The conglomerate's interests range from electronics and construction to shipbuilding, biopharmaceuticals and insurance.
The family said that the taxes to be paid are on Lee's shareholdings in Samsung Electronics, Samsung Life Insurance and Samsung C&T, along with his real estate properties. It said the payment amounts to more than half the value of Lee's total estate.
But the statement did not discuss the distribution of the inheritance among the family members.
A source familiar with the matter said that there is a possibility that it has not yet been finalized.
"The family can pay the tax together at the moment, and then they can calculate each other's share later," the source, asking not to be named, told Nikkei Asia.
The source also said that the Lee family will use its bank deposits and money borrowed from financial institutions to pay the tax.
"The inheritance tax payment is one of the largest ever in [South] Korea and globally, equivalent to three to four times the [South] Korean government's total estate tax revenue last year," the statement said.
Lee Kun-hee long controlled Samsung Group through a complex web of so-called circular shareholdings. He owned a 4.18% stake in Samsung Electronics -- the conglomerate's core -- as well as 20.76% of Samsung Life Insurance and 2.88% of Samsung C&T, its construction unit and de facto holding company.
Shares in Samsung Electronics closed 0.97% lower at 82,100 won.
The family also said it will donate Lee's vast collection of Korean and Western art to South Korean museums. Experts have said that donated works are not subject to inheritance taxes in South Korea.
Lee's art holdings totaled more than 23,000 pieces, the family said, and include works by Pablo Picasso, Marc Chagall, Paul Gauguin, Claude Monet, Joan Miro and Salvador Dali.
The family also said that it will donate 1 trillion won for health initiatives including vaccine and infectious disease treatment research as well as assisting with the medical expenses of children suffering from cancer and rare diseases.
Activists welcomed the donation of artworks, but said that should not be used as an excuse for Lee Jae-yong, who is serving a two-and-a-half year prison term for bribery and embezzlement, to receive a presidential pardon.
"There are some positive elements in the inheritance tax payment and donation, but they need to know that they should not use this as a way for Lee Jae-yong to receive a pardon," the Citizens' Coalition for Economic Justice, an activist group, said, insisting that the family should reveal details of how the stocks and real estate are to be distributed.
Some corporate leaders and opposition politicians have been asking President Moon Jae-in to bestow an amnesty on Lee for the sake of South Korea's economy, of which the Samsung Group is a pillar. Top business executives made the same request this month to Finance Minister Hong Nam-ki, who promised to relay it to the relevant government ministry.
The presidential Blue House issued no immediate reaction to the inheritance announcement. A high-ranking official there said on Tuesday, however, that it was not considering such a pardon.
Culture Minister Hwang Hee in a statement praised the Lee family for the donation of the art, saying it will help the country preserve cultural assets as well as allow people to enjoy them.
