SINGAPORE — The family of Samsung Electronics' late chairman announced Wednesday they will be paying off a massive inheritance tax bill of more 12 trillion Korean won (about $10.78 billion).
The inheritance tax payment is one of the largest in the history of South Korea and globally — "equivalent to three to four times the Korean government's total estate tax revenue last year," Lee Kun-hee's family said in a statement.
"As provided for under the law, the Family plans to pay the full amount of the inheritance tax over a period of five years, starting in April 2021," the Lee family said.
Lee passed away in October 2020 at the age of 78, after growing the Samsung Group into South Korea's largest conglomerate. He took the helm in 1987 following the death of his father, Lee Byung-chul, who founded the conglomerate.
Lee's massive estate
Yonhap reported that the family is likely to fund the inheritance taxes with stock dividends but could also get bank loans.
The family did not reveal how the members will split the patriarch's stockholdings.
Reuters reported in October that Lee was the wealthiest stock owner in South Korea.
His estate was valued at about $23.4 billion dollars, according to Reuters which cited local media. Lee's stock ownership includes 4.18% of Samsung Electronics common shares and 0.08% of preferred shares, 20.76% stake in Samsung Life Insurance, 2.88% stake in Samsung C&T and a 0.01% stake in Samsung SDS, reported Reuters.
Shares of those firms declined after news of the tax announcement on Wednesday. Samsung Electronics fell 0.97% and Samsung C&T dropped 2.92%. Samsung SDS slipped 0.8% while Samsung Life Insurance was 0.24% lower.
The family also said they will be donating 1 trillion won to health-care and medical causes.
"The late Chairman Lee's collection of antiques, Western paintings and works by Korean artists — approximately 23,000 pieces in total — will be donated to national organizations," they said, in recognition of his passion for art collection and "his belief in the importance of passing on our cultural heritage to new generations."
South Korean chaebols
Samsung is South Korea's largest chaebol — or large, family-run conglomerates that have historically played an important role in the country's economic development.
Such firms, which include the Hyundai Motor Group and SK Group, control vast networks of companies through a circular holding structure and their control typically exceeds cash-flow rights. That means families often wield undue influence over group companies in spite of their relatively small direct shareholdings.
Still, many citizens have demanded reforms to curtail the power of the chaebols as concerns linger over crony capitalism.
In January, Samsung heir Jay Y. Lee was sentenced to two and a half years in jail by a South Korean court. The younger Lee's return to prison came following a retrial of a bribery case involving former President Park Geun-hye, according to Yonhap.
— CNBC's Chery Kang and Saheli Roy Choudhury contributed to this report.
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