Samsung heirs to pay record inheritance tax

Lee, who is credited with transforming Samsung into a global electronics giant, died in October 2020.

South Korea has one of the highest inheritance tax rates in the world (50%) and the tax issue for Lee’s family has been closely watched by investors because of the potential for it to force them to reduce their stake in Samsung.

Lee’s stock ownership includes 4.18% of Samsung Electronics common shares and 0.08% of preferred shares, a 20.76% stake in Samsung Life Insurance, a 2.88% stake in Samsung C&T and a 0.01% stake in Samsung SDS, reported Reuters.

Shares of those firms declined following the tax announcement on Wednesday. Samsung Electronics fell 0.97% and Samsung C&T dropped 2.92%. Samsung SDS meanwhile slipped 0.8% while Samsung Life Insurance was 0.24% lower.

The inheritance tax payment is “equivalent to three to four times the Korean government’s total estate tax revenue last year,” Lee Kun-hee’s family said in a statement.

“As provided for under the law, the Family plans to pay the full amount of the inheritance tax over a period of five years, starting in April 2021,” the Lee family said.

In a statement, Samsung said that Lee's family "expects to pay more than 12trn won in taxes related to inheritance, which is more than half of the value of the late chairman's total estate.”

Investors did not get much clarity regarding Samsung’s stock on Wednesday and will instead need to wait for regulatory filings to discover changes in shareholdings by Lee's son and Samsung Electronics vice chairman Jay Y. Lee, who has been the de facto head of Samsung Electronics since 2014.

Jay Y. Lee is currently in prison serving two years and six months for his role in a bribery scandal that involved the country's former President Park Geun-hye.