Samsung family to pay W12tr in inheritance tax

The heirs of the late Samsung Group Chairman Lee Kun-hee on Wednesday announced what will become of the late tycoon’s assets, which amount to over 30 trillion won ($27 billion), in the country’s biggest inheritance in recent history.

According to a statement released by Samsung Electronics on behalf of the family, they plan to return much of that wealth to society. The unparalleled donation will include artworks and antiques worth nearly 10 trillion won, and 1 trillion won is to be allocated for the cause of bettering the country’s health care system.

Lee died Oct. 25 after years of illness. His heirs are his wife and three children, including only son Lee Jae-yong, who has taken the helm of the Samsung empire.

Of the 20 trillion-won worth of assets that the family is inheriting, shares in Samsung companies account for 19 trillion won.

The family expects an inheritance tax of 12 trillion won and plans to pay it in six installments over five years.

“Tax payment is a due duty, and is what we have to do,” the family said in the statement. They said the first installment would be paid this month. No further details on the payment plan were provided, nor did they say how they planned to distribute the late chairman’s shares among themselves.

The breakdown showing which specific shares will be passed on to which family members, including Lee Jae-yong, the Samsung Electronics vice chairman, will be revealed through regulatory filings from each Samsung affiliate, the statement said.

According to Samsung officials, the family is making the donations to fulfill a promise the late chairman made in 2013. The tycoon, who faced public criticism for having created slush funds using borrowed bank accounts, had pledged to pay due taxes and return to society what was left of all the funds he had amassed in an illicit manner.

Explaining the decision to donate 1 trillion won to the medical sector, Samsung officials said the late chief always believed he had a duty to help improve human health.

Of the 1 trillion won, 700 billion won will be used to help South Korea improve its response to infectious diseases in light of the current COVID-19 pandemic, the family said in the statement.

The National Medical Center will be in charge of executing the donation plan, in consultations with related institutions.

The majority of the donation, 500 billion won, will be used to launch a new hospital specializing in infectious diseases.

The envisioned hospital, the first of its kind in Korea, is to have 150 beds, negative pressure rooms and cutting-edge medical equipment.

Some 200 billion won is earmarked for establishing a national research institute for infectious diseases under the Korea Diseases Control and Prevention Agency.

The family will also provide 300 billion won to support children with cancer and rare diseases through Seoul National University Children’s Hospital.

Some 150 billion won will be used to support the treatment of 13 kinds of childhood cancer, including leukemia and lymphoma, while 60 billion won will be used to help children with 14 kinds of rare diseases such as Crohn’s disease.

Samsung expects the donation to benefit around 12,000 children suffering from cancer over the next 10 years, and 5,000 kids with rare diseases.

“Chairman Lee had had keen interests in improving the country’s medical infrastructure, especially paying more attention to children’s treatments,” a Samsung official said. 

The late chairman once said, “One of companies’ missions is to raise quality of mankind’s health and life.”

The Samsung family’s massive inheritance tax is likely to trump similar taxes paid elsewhere.

The bereaved family of former Apple CEO Steve Jobs paid the equivalent of 3.4 trillion won in inheritance taxes.

In Korea, LG Corp. Chairman Koo Kwang-mo is paying off a total of 921.5 billion won across a span of five years, since his father’s death in 2018.

Lotte Chairman Shin Dong-bin’s inheritance tax is estimated to be around 300 billion won.

By Song Su-hyun (song@heraldcorp.com)