Samsung's Lee family to pay more than $10.8bn inheritance tax
It is one of the largest-ever in South Korea and globally bill of this kindEuropost
The family of late Samsung Electronics Co Ltd Chairman Lee Kun-hee announced they are obliged to pay over 12trn won ($10.8bn) in inheritance tax for his estate and donate his vast private art collection to state curators. As Reuters reminds, Lee, who is credited with transforming Samsung into the world's largest smartphone and memory chip maker, died on 25 October with an estate local media valued at around 26 trillion won.
Therefore, the inheritance tax bill - one of the largest-ever in South Korea and globally - has been closely watched due to its potential to dilute the family's controlling stake in Samsung. The family said it planned to pay the bill over five years in six instalments, starting this month.
"It is our civic duty and responsibility to pay all taxes," the family said in a statement released by Samsung.
The share price of Samsung C&T Corp - the Samsung conglomerate's de facto holding company - dropped as much as 5.5% after the statement, which provided no detail on how Lee's shares would be distributed or sold, nor specifics on how the family planned to fund the payments.The family, however, had been discussing using shares in affiliated companies as collateral for personal loans to pay part of the tax bill to avoid selling Samsung holdings, Reuters reported last week.
On Wednesday, as anticipated, the family said it will donate 1trn won to improve public healthcare, including 500bn won to build South Korea's first specialist hospital for infectious disease. Much of Lee's $1.76bn personal art collection, including works by Picasso, Monet and Chagall, will be in the meantime donated to organisations including the National Museum of Korea and National Museum of Modern and Contemporary Art, the family said.
Remaining works by Giacometti, Rothko and others will be managed by the family and Leeum Samsung Museum of Art, Yonhap news agency reported.
The collection was previously the subject of public calls to keep all of the artwork in South Korea. Last month, former culture ministers and art groups called for a new law to allow the family to donate the art in lieu of some of the tax bill.
This coincides with analysts who have said the family is likely to use loans and dividends from both their own and Lee's shares to pay the tax.
Lee's shareholding, by value, includes 4.18% of Samsung Electronics, 0.08% of Samsung Electronics preferred shares, 20.76% of Samsung Life Insurance Co Ltd, 2.88% of Samsung C&T, and 0.01% of Samsung SDS Co Ltd. Jay Y. Lee is the largest shareholder of Samsung C&T with a 17.33% stake. But the heir is currently halfway through a 30-month jail sentence for bribery and other offences, with the presidential Blue House on Tuesday dismissing calls from business lobby groups for a pardon.