A Samsung (R) flag and South Korean national flag flutter in the company’s Seocho building in Seoul on April 28, 2021.
YOUNG YEON-JE | AFP via Getty Images
SINGAPORE – The late Samsung Electronics chairman’s family announced Wednesday that they will repay a massive estate tax of more than 12 trillion Korean won (about $ 10.78 billion).
The estate tax payment is one of the largest in South Korea’s history and worldwide – “that’s three to four times the total estate tax revenue of the Korean government last year,” Lee Kun-hee’s family said in a statement.
“As required by law, the family plans to pay the full amount of inheritance tax over a five-year period from April 2021,” the family said in the press release.
Lee died in October 2020 at the age of 78 after expanding the Samsung Group into South Korea’s largest conglomerate. He took over the helm in 1987 after the death of his father Lee Byung-chul, who founded the conglomerate.
Yonhap reported that the family will likely fund inheritance taxes with stock dividends, but could also get bank loans.
The family did not disclose how members will divide the patriarch’s shares.
Reuters reported in October that Lee was the richest stockholder in South Korea.
According to Reuters, which quoted local media, his estate was valued at around $ 23.4 billion. According to Reuters, Lee’s shareholding includes 4.18% of the common stock of Samsung Electronics and 0.08% of the preferred stock, 20.76% of the stake in Samsung Life Insurance, 2.88% of the stake in Samsung C&T and 0.01% of the shares in Samsung SDS.
These companies’ stocks were mixed following Wednesday’s tax return announcement. Samsung Electronics lost 0.72% and Samsung C&T fell 2.92%. Samsung SDS was flat while Samsung Life Insurance was up 0.36%.
The family also said they will donate Won 1 trillion to health and medical needs.
“The late Chairman Lee’s collection of antiques, Western paintings and works by Korean artists – approximately 23,000 pieces in total – will be donated to national organizations,” they said in recognition of his passion for art collection and his belief in the importance of passing on our cultural heritage new generations. “
Samsung is South Korea’s largest chaebol – or large, family-run conglomerate that has historically played an important role in the country’s economic development.
Such companies, which include Hyundai Motor Group and SK Group, control large corporate networks through a circular holding structure, and their control usually exceeds cash flow rights. This means that families, despite their relatively small direct holdings, often exert an inadequate influence on group companies.
Still, many citizens have called for reforms to curb the chaebols’ power as concerns about crony capitalism remain.
In January, Samsung heir Jay Y. Lee was sentenced to two and a half years in prison by a South Korean court. The younger Lee’s return to prison came after a re-negotiation of a bribery case involving former President Park Geun-hye, according to Yonhap.
– CNBC’s Chery Kang and Saheli Roy Choudhury contributed to this report.