Monday, 15 April 2024
Story of worlds highest inheritance tax of Samsung chairman

World’s highest inheritance tax story of Samsung chairman Lee Kun Hee

Lee Kun-hee (9 January 1942 – 25 October 2020) was a South Korean businessman and industrialist who served the chairman of Samsung Group from 1987 to 2008 and from 2010 to 2020. With an estimated net worth of US$21 billion at the time of his death, he was the richest person in South Korea, a position that he had held since 2007.

He was convicted twice, once in 1996 and subsequently in 2008, for corruption and tax evasion charges, but was pardoned on both instances.

The Seoul Central District Court founded Lee guilty on charges of financial wrongdoing and tax evasion. Prosecutors requested that Lee be sentenced to seven years in prison and fined 350 billion won (approximately US$312 million). The court fined him 110 billion won (approximately US$98 million) and gave him a three-years suspended sentence. However, on 29 December 2009, South Korean president Lee Myung-bak pardoned Lee, stating that the intent of the pardon was to allow Lee to remain on the International Olympic Committee.

The family of Samsung Electronics’ deceased chairman Lee Kun-hee have to pay more than 12trn won ($10.78bn) in inheritance taxes on his estate left out. It is important to mention here that the South Korea has one of the world’s highest inheritance tax rates in the world.

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Samsung Electronics’ deceased chairman Lee Kun-hee, who is credited with converting Samsung into a global electronics group. Mr Lee who died in October 2020 last year.

The tax issue has affected a lot to Mr Lee family after his death. Because it it could have affected the Lee family’s stake in Samsung.

Son of Mr Lee

Jay Y. Lee is Son of the deceased chairman of Samsung electronics. Jay Y. Lee is head of Samsung electronics company since 2014. Jay Y. Lee is currently in prison serving two years and six months for his role in a bribery scandal that involved the country’s former President Park Geun-hye.

A massive Inheritance tax liability

According to Samsung electronics company this payment of inheritance tax is one of the largest ever tax in Korea and all over the world.

According to Mr Lee’s family “expects to pay more than 12trn won in taxes related to inheritance, which is more than half of the value of the late chairman’s total estate,” it said.

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The Lees are South Korea’s richest family. The $10.8 billion, a more than half the value of the father’s total estate, and more than three times the total inheritance taxes the government collected last year, according to Samsung.

Many belongings of the Mr Lee donated to different organizations. According to Media reports such donations will reduce the family’s tax liability.

At 50%, South Korea’s inheritance tax rate is the world’s second highest rate after Japan. A premium can be added to shares if the deceased has a controlling interest in a company, potentially taking the top rate even higher. If comparison is done, the inheritances are taxed at 40% in the US and the UK.

South Korea’s tax code allows payment in instalments, with one-sixth of the total tax bill to pay first. Then the rest over five years at an annual interest rate currently set at 1.2%.

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