Samsung's Lee family to pay more than 12 trln won inheritance taxes (updated)

SAMSUNG SDS

28/04/2021 03:52

(Adds Lee Kun-hee's estate value, share reactions, Blue House
comment on heir Jay Y. Lee in paragraphs 2, 8, 12-13)
    By Joyce Lee
    SEOUL, April 28 (Reuters) - The family of deceased Samsung
Electronics  005930.KS  chairman Lee Kun-hee said on Wednesday
it will pay more than 12 trillion won ($10.78 billion) in
inheritance taxes for the estate of the late patriarch.
    Lee, who is credited with transforming Samsung into the
world's largest smartphone and memory chip maker, died on Oct.
25. His estate, valued at around 26 trillion won ($23.4 billion)
according to local media, included shareholdings in Samsung
affiliates valued at $17 billion.
    The Lee family's handling of the hefty inheritance tax bill
- one of the largest ever in both Korea and globally - had been
closely watched as it could have resulted in the dilution of the
family's controlling stake in Samsung. 
    The family's statement on Wednesday did not give details of
how Lee's shares will be distributed among the heirs or whether
any will be sold.  
    The family had been discussing using shares in affiliated
companies as collateral for personal loans to pay part of the
tax bill, a measure that would avoid the sale of their extensive
Samsung holdings, Reuters reported last week, citing sources.
 urn:newsml:reuters.com:*:nL1N2ME00M 
    The family is also expected to use dividends from both their
own and Lee's shareholdings to pay the tax, analysts have said.
    Lee's shareholdings included a 4.18% stake in Samsung
Electronics, 0.08% of Samsung Electronics preferred shares,
20.76% of Samsung Life Insurance  032830.KS , 2.88% of Samsung
C&T  028260.KS , and 0.01% stake in Samsung SDS  018260.KS ,
which according to South Korean tax code valuation were worth
about 18.96 trillion won ($17 billion). 
    Samsung C&T shares dropped as much as 5.5% and Samsung Life
Insurance shares fell as much as 1.3% after the announcement. 
    Any changes in shareholding by Lee's son and Samsung
Electronics vice chairman Jay Y. Lee or other family members are
expected to be reported in quarterly regulatory filings. 
    The family will make payments in instalments, as allowed by
South Korea's tax code, with one-sixth of the total tax bill to
be paid first, then the rest over five years at an annual
interest rate currently set at 1.2%, according to tax officials.
    The family also announced it will donate 1 trillion won to
public health care charities, including for the creation of a
specialized infection diseases laboratory. Lee's extensive
collection of antiques and paintings will be donated to the
National Museum of Korea and other cultural organizations. 
    Meanwhile, a presidential Blue House official said the
office of President Moon Jae-in was not considering a pardon for
Jay Y. Lee following his January conviction for bribery and
other offences, and had no plans to do so. 
    Business lobby groups, religious leaders and some lawmakers
have said Jay Y. Lee should be freed to help South Korea secure
supplies of coronavirus vaccines. He has served about half of a
30-month sentence and last week appeared in court to face
separate fraud and stock manipulation charges.  urn:newsml:reuters.com:*:nL4N2MF071 
   
($1 = 1,111.7700 won)

 (Reporting by Joyce Lee; Writing by Jack Kim; editing by Jane
Wardell)
 ((jungyoon.lee@tr.com; +82 2 6936 1467;))