SEOUL (REUTERS) – The family of deceased Samsung Electronics chairman Lee Kun-hee said on Wednesday (April 28) it will pay more than 12 trillion won (S$14.3 billion) in inheritance taxes for the estate of the late patriarch.
Mr Lee, who is credited with transforming Samsung into the world’s largest smartphone and memory chip maker, died on Oct 25. His estate included shareholdings in Samsung affiliates valued at US$17 billion (S$22.6 billion).
The Lee family’s handling of the hefty inheritance tax bill – one of the largest ever in both South Korea and globally – had been closely watched as it could have resulted in the dilution of the family’s controlling stake in Samsung.
The family had been discussing using shares in affiliated companies as collateral for personal loans to pay part of the tax bill, a measure that would avoid the sale of their extensive Samsung holdings, Reuters reported last week, citing sources.
The family’s statement on Wednesday did not give details of how Mr Lee’s shares will be distributed among the heirs or whether any will be sold. Besides loans, the family is expected to use dividends from both their own and Lee’s shareholdings to pay the tax, analysts have said.
Mr Lee’s shareholdings included a 4.18 per cent stake in Samsung Electronics, 0.08 per cent of Samsung Electronics preferred shares, 20.76 per cent of Samsung Life Insurance, 2.88 per cent of Samsung C&T, and 0.01 per cent stake in Samsung SDS, which according to South Korean tax code valuation were worth about 18.96 trillion won.
South Korea’s tax code allows payment in instalments, with one-sixth of the total tax bill to be paid first, then the rest over five years at an annual interest rate currently set at 1.2 per cent.
The family also announced it will donate 1 trillion won to public health care charities, including for the creation of a specialized infection diseases laboratory. Mr Lee’s extensive collection of antiques and paintings will be donated to the National Museum of Korea and other cultural organizations.