(ATF) Samsung heir Lee Jae-yong and other family members of the firm's late chairman Lee Kun-hee said they will pay over 12 trillion won, or around $10.8 billion, the largest-ever in the country’s history, in taxes related to inheritance.
The family plans to pay the full amount over a period of five years in six instalments, starting this month, Samsung Electronics said on Wednesday. The legal deadline for the family to file the tax return was this Friday.
Lee Kun-hee, the late Samsung Electronics chairman, was the country's richest man when he died last October, aged 78, after being hospitalised for years, leaving an estimated 22 trillion won ($19.6 billion) in assets.
South Korea has stringent inheritance tax laws and high rates, resulting in a hefty bill for the family, including Samsung Electronics vice-chairman Lee Jae-yong, who is currently in jail for bribery, embezzlement and other offences.
"The inheritance tax payment is one of the largest ever in Korea, and globally," Samsung said in a statement, adding the Lee family will pay it off in six instalments starting this month.
South Korea charges as much as 60% for inherited shares for large shareholders. In comparison the inheritance tax rate in Japan, France, UK and US is 40% to 55%.
Samsung didn't specify how that tax will be distributed among the family members.
DE FACTO LEADER
However, it is likely that the majority of the late chairman's stakes in Samsung affiliates will go to his only son Lee Jae-yong, who has been the de facto leader of the entire business group since his father suffered a heart attack in 2014.
Lee has since helmed the group in his capacity as vice-chairman of Samsung Electronics, but is currently serving a two and a half-year sentence for his involvement in a 2016 corruption scandal that sparked massive protests and ousted South Korea's then-president, Park Geun-hye.
The late chairman's personal art collection of around 23,000 pieces will also be donated to various national organisations, Samsung said.
These include works by Marc Chagall, Pablo Picasso and Paul Gauguin as well as Claude Monet, Joan Miro and Salvador Dali. They also include works by Korean artists Kim Whanki, Park Soo-keun, Lee Jung-seop and Chang Ucchin.
Another $900 million will be donated to health causes, half of it to be spent on building South Korea's first specialist infectious diseases hospital.
Around $180m will be spent for a laboratory to support research into vaccines and treatment, while the balance $270m will be spent to help with efforts to respond to infectious diseases, and medical expenses for children suffering from cancer and rare diseases.
Lee is undergoing a separate trial over stock manipulation, which critics say was key to ensuring a smooth succession of power within the conglomerate.
Commentators online called for him to be freed on Wednesday, with one posting on Naver, the South's largest portal: "Samsung is doing this much for the public, please release Lee Jae-yong now."
Earlier this week five major South Korean business groups appealed to the presidential Blue House for a pardon for him on national economic grounds.
But an official told reporters that it had "not considered a pardon for him so far and have no plan, for now, to do so".
Lee apologised last May for some governance issues at the group, pledging to ensure "there will be no more controversy over the succession" and that he would not allow his children to take over from him at the firm.
While the family did not reveal how they would split inherited stocks among them to pay the tax bill, analysts say the inheritance tax would be a key issue in reshaping the ownership of one of the nation’s top conglomerates.
For, raising cash for the tax payment will determine how the Lee family will extend its control over Samsung's business empire, which extends from semiconductors, smartphones and TVs to construction, shipbuilding and insurance.
Analysts expect that the process could result in a shake-up across the group since the imperatives of the Lee family would be to retain control despite paying this huge inheritance tax bill.
Investors, who have long anticipated a further shake-up in the event of Lee's death, are hoping for gains from restructuring to strengthen de facto holding company Samsung C&T's control of Samsung Electronics, such as Samsung C&T buying an affiliate's stake in the tech giant.
Samsung – whose flagship subsidiary is among the world's biggest smartphone and computer chip-makers – is by far the largest of the family-controlled empires known as chaebols that dominate business in South Korea, the world's 12th-largest economy.
The conglomerate is crucial to the country's economic health and its overall turnover is equivalent to a fifth of the national gross domestic product.
- With reporting by AFP.