Samsung heirs should take big tax burden
Samsung Electronics Vice Chairman Lee Jae-yong and other Samsung heirs have to pay more than $10 billion in the inheritance tax, according to the CXO Institute this week.
The Korean business tracker said that Samsung Chairman Lee Kun-hee’s shares are worth $16.62 billion so that his heirs are required to pay $10 billion in the tax.
Samsung Chairman Lee passed away in late October, leaving behind shares in major Samsung units like Samsung Electronics, Samsung Life, and Samsung C&T. He was survived by his wife Hong Ra-hee, the only son and Vice Chairman Lee, and two daughters of Lee Bu-jin and Lee Seo-hyun.
“Because Chairman Lee died on Oct. 25, we need to check the average stock price of Samsung shares over a four-month period _ two months before and after the day of his death,” CXO Institute chief Oh Il-sun said.
“As the inheritance tax rate is some 60 percent, Samsung heirs should pay about $10 billion. In consideration of Chairman Lee’s other assets like real property, cash, bonds, and art, the overall taxes would be far greater.”
Oh noted that the recent rally in the Seoul bourse led to the higher inheritance tax than previously expected.
The share price of Samsung Electronics was around $55 per share in late October but surged more than 20 percent to higher than $65 this month.
Most of former Chairman Lee’s stock value comes from Samsung Electronics _ he held a 4.18 percent stake in the world’s largest producer of smartphones and memory chips.
Oh expected Samsung heirs, including Vice Chairman Lee, will take advantage of the country’s law allowing inheritors to pay taxes on an installment plan for up to five years.
Samsung heirs are required to report tax by the end of next April.
In this climate, observers point out that the country’s inheritance tax is way too high even compared to that of the United States.
“Samsung heirs are required to pay the inheritance tax as stipulated at the relevant law. But we need to check whether the tax rate is way too high in the future,” Prof. Sung Tae-yoon at Yonsei University said.
