waves_of_light (waves_of_light) wrote in omonatheydidnt,

Samsung family unloads W2 trillion in shares to pay inheritance tax

Korea's notoriously high inheritance taxation has forced the heirs of the late Samsung Chairman Lee Kun-hee to sell shares in Samsung affiliates worth around 2 trillion won ($1.67 billion) to fulfill their tax obligations.

Hong Ra-hee, the widow of the late chairman, reported to the Financial Supervisory Service (FSS), Oct. 5, that she plans to sell 19.9 million shares in Samsung Electronics. The shares are 0.33 percent of the company's total stock and have an estimated value of 1.4 trillion won. With the sale, Hong's shares in Samsung Electronics will be reduced to 1.97 percent.

Hotel Shilla CEO Lee Boo-jin, one of the daughters of the late chairman, reported that she plans to sell 1.59 million shares in Samsung SDS, worth 242.2 billion won; while Lee Seo-hyun, his other daughter, and chief of the Samsung Welfare Foundation, will sell 3.45 million shares in Samsung Life Insurance and 1.5 million shares in Samsung SDS.

They signed a trust contract with KB Kookmin Bank that will run through April 25. Hong's only son and Samsung Electronics Vice Chairman Lee Jae-yong didn't sign the contract.

Industry officials said that selling the stakes in the group affiliates is seen as a measure of the heirs' willingness to faithfully pay inheritance taxes in accordance with the law as originally promised. But they added the disposal of the shares could be a short-term burden on the Samsung affiliates.

Under the law here, the maximum inheritance tax rate of 50 percent is applied when the property over 3 billion won ($2.5 million) is inherited. If the deceased is a major shareholder of a large-sized company, the rate rises to 60 percent, more than double the average inheritance tax rate of 25.3 percent among member nations of the Organization for Economic Cooperation and Development.

The chairman passed away last October, leaving behind 19 trillion won in stocks, plus around 3 trillion won worth of artwork and real estate. His heirs are expected to opt to pay the inheritance tax over a five-year period after making an initial payment of one-sixth of the total owed or around 2 trillion won.

The high inheritance tax rate in Korea is coming as a serious burden not only for owner families of large-sized companies but also the general public. With regard to this, Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki said the government was looking closely at whether the current system should be amended.

"We will check the overall inheritance tax system and see what improvements can be made," Hong said during a National Assembly audit, Oct. 6, when asked whether the government was considering introducing the inherited property acquisition tax system.

The inherited property acquisition tax system can lower the burden on heirs as it is a tax imposed on their individual inheritance acquisition, not the total property bequeathed by the deceased.

source: The Korea Times
Tags: current events, technology / electronics

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