Owners of South Korean conglomerates and their family members have pocketed a total of 469 billion won ($411 million) in dividends over the past five years from affiliates owned by them, industry data showed on Sunday.
Family-owned conglomerates, or chaebol, have been under fire in the country for their practice of granting profitable contracts to their affiliates owned by heads’ children or relatives in a bid to avoid paying gift taxes on future transfers of wealth.
Previously, laws did not regulate the inheritance of such assets free of tax. But beginning this month, the revised tax law calls for levying such taxes on larger firms whose owners or their family members hold more than 3 percent in stakes in their affiliates.
The new law requires all South Korean conglomerates whose inter-affiliate transactions surpassed 30 percent of their sales as of last year to be subject to taxation.
According to Chaebol.com, which tracks the country’s family-run conglomerates, heads of the country’s top 30 conglomerates and their relatives received the dividends from 78 affiliates.
Hyundai Motor chairman Chung Mong-koo and his son Eui-sun have received a combined 78.1 billion won in dividends from Hyundai Glovis Co. over the past five years. Chairman Chung and his son hold a combined 43.4 percent in the logistics company.
They have also got a combined 66.6 billion won in dividends from Hyundai Amko Co., a construction unit, during the cited period, the data showed.
According to a separate report from CEOSCORE, Hyundai Motor Vice Chairman Chung Eui-sun may have to pay the largest amount of gift tax of some 13 billion won, followed by his father at around
10.9 billion won and Samsung Electronics Vice Chairman Lee Jae-yong at 8.8 billion won.
The data came as the National Tax Service is ramping up efforts to establish fair tax administration in the corporate sector. The NTS has been seeking to toughen its crackdown on large-sized businesses that are employing ever-sophisticated tactics to avoid paying taxes.
Meanwhile, President Park Geun-hye has been pushing for an “economic democratization” campaign to curb conglomerates’ abuse of power. (Yonhap News)
