Business World

Samsung’s Lee family to pay more than $10.78 billion in inheritance taxes

The family of deceased Samsung Electronics chairman Lee Kun-hee will pay more than 12 trillion won (~ approximately $10.78 billion) in inheritance taxes for the estate of the late patriarch.

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 $17 billion.

The Lee family’s handling of the hefty inheritance tax bill is believed to be the largest ever in both Korea and globally.

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.

The family’s statement on Wednesday did not give details of how 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.

Lee’s shareholdings included a 4.18% stake in Samsung Electronics, 0.08% of Samsung Electronics preferred shares, 20.76% of Samsung Life Insurance, 2.88% of Samsung C&T, and 0.01% stake in Samsung SDS, which according to South Korean tax code valuation were worth about 18.96 trillion won ($17 billion).

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%.

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. Lee’s extensive collection of antiques and paintings will be donated to the National Museum of Korea and other cultural organizations.