This Month's Payment Deadline for 'Lee Kun-hee Inheritance Tax' Likely to Be Paid in Installments... Collateral Required

[Sejong=Asia Economy Reporter Kwon Haeyoung] The heirs of the late Lee Kun-hee, chairman of Samsung Electronics, are likely to choose the installment payment (annual installment payment) method to report and pay the enormous inheritance tax exceeding 11 trillion won on stocks by the end of this month. The deadline for voluntary reporting and payment of inheritance tax for Lee Jae-yong, vice chairman of Samsung Electronics and son of Chairman Lee, is by the end of this month.

According to the National Tax Service on the 18th, the installment payment system allows taxpayers to pay one-sixth of the declared tax amount when reporting inheritance tax and pay the remaining five-sixths in installments over five years.

The inheritance tax on the stock portion of Chairman Lee's inherited assets, amounting to 11.04 trillion won, has already been finalized. Including real estate and artworks, the total inheritance tax is estimated to be around 13 trillion won. Assuming the inheritance tax is 13 trillion won, more than 2.1 trillion won must be paid by the end of this month, and the remaining five-sixths must be paid in five installments over five years.

Regarding the interest that taxpayers must pay over the five-year installment period, i.e., the additional charge for annual installment payment, it is determined by the Ministry of Strategy and Finance considering the interest rate of one-year fixed deposits at commercial banks. When Chairman Lee passed away last year, the additional charge rate was 1.8%, but it was lowered to 1.2% last month following the revision of the Enforcement Rules of the Framework Act on National Taxes. Based on the current rate, the additional charge for the first year of installment payment has decreased by about 60 billion won. However, the additional charge rate may be adjusted again before the payment next year.

To apply for installment payment, the taxpayer must provide collateral to the tax office. If the inheritance tax is 13 trillion won, the installment payment amount is 10.8 trillion won, so the collateral value must exceed this amount. This is why a significant portion of the inherited assets is expected to be used as collateral provided to the National Tax Service. With the provision of collateral, installment payment is approved on the inheritance tax reporting date, but the final inheritance tax amount may change depending on the results of the National Tax Service's investigation.

An official from the National Tax Service explained, "In principle, the tax amount is notified within nine months after reporting, but if the investigation takes time, it may be delayed further."