[Chairman Lee Kun-hee Passes Away] Inheritance Tax Exceeds 10 Trillion Won for Lee Jae-yong and Others

On the 25th, the day Lee Kun-hee, Chairman of Samsung Group, passed away, the flag at the Samsung Electronics building in Seocho-gu, Seoul, was fluttering in the wind. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Kim Hyewon] Attention is focused on the inheritance tax that heirs, including Samsung Electronics Vice Chairman Lee Jae-yong, who will inherit the assets after Samsung Group Chairman Lee Kun-hee passed away on the 25th.

According to the Financial Supervisory Service's electronic disclosure system, the valuation of Chairman Lee's shares as of the closing price on the 23rd is 18.2251 trillion KRW.

As of the end of June this year, Chairman Lee held ▲ 249,273,200 shares of Samsung Electronics (4.18% stake) ▲ 619,900 preferred shares of Samsung Electronics (0.08%) ▲ 9,701 shares of Samsung SDS (0.01%) ▲ 5,425,733 shares of Samsung C&T Corporation (2.88%) ▲ 41,519,180 shares of Samsung Life Insurance (20.76%), among others.

Chairman Lee is the largest shareholder or a special related party of the largest shareholder in these four affiliates. All are subject to a surcharge as largest shareholders under the Inheritance Tax Act.

Therefore, the total inheritance tax on the shares of these four affiliates is calculated by applying a 20% surcharge to the valuation amount of 18.2 trillion KRW, then multiplying by a 50% tax rate, and applying a 3% deduction for voluntary reporting, resulting in approximately 10.6 trillion KRW.

Inheritance tax specialists estimate that 60% of the stock valuation and 50% of other assets will be paid as inheritance tax.

According to the inheritance tax law, if the gift amount exceeds 3 billion KRW, the highest tax rate of 50% is applied, and if the deceased was the largest shareholder or a special related party, a 20% surcharge is added to the valuation.

Chairman Lee is currently the top shareholder of domestic listed companies. He maintained the top shareholder position for years even while bedridden.

The stock valuation is calculated based on the average closing price over four months, two months before and after death, so the actual tax amount may vary.

A 50% tax rate applies to other assets such as real estate.

Heirs pay inheritance tax proportionate to their inherited share of the total inheritance tax. The deadline for inheritance tax filing and payment for Chairman Lee's heirs is the end of April next year.

LG Group Chairman Koo Kwang-mo is also paying 921.5 billion KRW in inheritance tax on assets inherited from the late Chairman Koo Bon-moo in a similar manner.