The owner family of Samsung Group is on track to finalize the payment of approximately 12 trillion won ($8 billion) in inheritance taxes left by the late Chairman Lee Kun-hee by the end of this month. This payment, spread over five years starting from 2021, signifies the conclusion of one of the largest inheritance tax obligations in South Korean history. It is anticipated to alleviate financial burdens on the family, potentially expediting Chairman Lee Jae-yong’s pursuit of a “New Samsung” growth strategy.
Lee Jae-yong, the sole son of the late chairman, together with other heirs, has managed the tax burden by utilizing a mix of share sales in group affiliates, dividend income, and other financial measures. Notable heirs encompass his mother, Hong Ra-hee, who serves as the honorary director of the Leeum Museum of Art, and his sisters, Lee Boo-jin, the chief executive of Hotel Shilla, and Lee Seo-hyun, the president of Samsung C&T.
Following Lee Kun-hee’s passing in 2020, the family has received dividends totaling around 4 trillion won from Samsung affiliates. When factoring in previously accumulated dividends, it is estimated that over 6 trillion won has been utilized to cover the tax payments. Moreover, the increasing share prices of key affiliates, including Samsung Electronics, have contributed to alleviating the financial strain associated with raising funds.
Lee Kun-hee’s estate, valued at approximately 26 trillion won, comprises stocks, real estate, and art collections. The resultant inheritance tax bill, estimated at about 12 trillion won, stands as one of the largest ever imposed in South Korea. Analysts suggest that the completion of these payments could represent a pivotal moment for the group, allowing it to move past financial and governance constraints linked to the inheritance process.
Samsung, with a focus on addressing both the tax burden and corporate governance restructuring, is poised to boost investments and reorganize its business in future growth sectors like semiconductors, artificial intelligence, and biotechnology. The positive outlook is reinforced by robust earnings in the semiconductor division and a reduction in legal uncertainties surrounding Lee Jae-yong over the past year. Park Ju-gun, the chief executive of corporate tracker Leaders Index, remarked that this year holds particular significance as the inheritance tax payments’ completion aligns with the resolution of legal risks and enhanced earnings at Samsung Electronics. The unveiling of a detailed roadmap for the “New Samsung” initiative by Lee remains to be seen.
