Choi Jaewon Fully Paid 250 Billion KRW Gift Tax Last February
Sold All Shares Gifted from Chairman Choi Taewon
Stock Price Halved Compared to 2018 Gift Date
Choi Jae-won, Senior Vice Chairman of SK Group, who received shares worth approximately 460 billion KRW as a gift from Choi Tae-won, Chairman of SK Group, sold all of them and converted about 380 billion KRW into cash. After paying about 250 billion KRW in gift tax, the amount remaining for Vice Chairman Choi is estimated to be only about 120 billion KRW, which is just one-quarter of the gifted amount.
According to the business community on the 31st, Vice Chairman Choi completed the payment of gift tax last February. He received 1.66 million shares (2.34%) of SK Inc. common stock from Chairman Choi in November 2018. Considering the common stock price of 280,500 KRW at that time, the total value of the shares gifted to Vice Chairman Choi was 465.6 billion KRW. The gift tax he had to pay is estimated to be about 256 billion KRW, applying the highest tax rate (50%) and considering the management premium (20%) and gift tax credit benefits (5%).
The following February, Vice Chairman Choi pledged 985,900 shares of SK Inc. stock as tax payment collateral at the Seocho Tax Office and applied for installment payment. Installment payment is a system that allows taxpayers to pay at least one-sixth of the inheritance or gift tax exceeding 20 million KRW within the reporting and payment deadline and pay the remaining amount over five years. In Vice Chairman Choi’s case, he paid 43 billion KRW first and planned to pay the remaining 213 billion KRW over five years. He used installment payment to reduce the burden of gift tax payment, but this choice resulted in the worst outcome as SK Inc.’s stock price fell afterward.
Vice Chairman Choi has been disposing of the gifted shares to pay more than 40 billion KRW in gift tax annually. Starting with selling 588,787 shares in February 2021 to convert 166.7 billion KRW into cash, he sold 99,000 shares on the 25th, leaving only 1,815 shares, which is less than 0.01% of the gifted SK Inc. shares.
However, despite selling all the gifted shares, Vice Chairman Choi holds only about 120 billion KRW in cash. This is because the SK Inc. stock price has significantly dropped over the past few years, forcing sales at low prices. The 99,000 shares he recently sold had a unit price of 147,543 KRW per share, totaling 14.6 billion KRW in sales. This is about half the per-share value of 280,000 KRW at the time of the gift in 2018.
Furthermore, the SK Inc. shares sold by Vice Chairman Choi are also related to the divorce lawsuit between Chairman Choi Tae-won and Noh So-young, director of Art Center Nabi, which is scheduled to be held at the Supreme Court. The appellate court ruled a property division amount of 1.38 trillion KRW, considering the 922.8 billion KRW gifted by Chairman Choi to relatives in 2018 as marital property. If this ruling is finalized, Chairman Choi will have to divide property equivalent to the shares sold by Vice Chairman Choi to Ms. Noh.
An SK official said, "Since this is a personal matter, we do not know much about the details," but added, "We understand that there is not much property left after paying the taxes."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
