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Samsung Vice Chairman Lee Jae-yong, how to raise ’11 trillion won + α’inheritance tax

Discussing measures such as expanding dividends and selling shares… Report and payment by next April

Business world “Samsung is growing hard in the judicial risk of Vice Chairman Lee”

(Seoul = Yonhap News) Reporter Mi-sook Seo = As the late Samsung Group chairman Lee Kun-hee’s inheritance tax is reported to exceed at least 11 trillion won, discussions on the funding of the Samsung family’s inheritance tax, including Vice Chairman Lee Jae-yong, are expected to intensify.

As Vice Chairman Lee Jae-yong’s ruling on the Gukjeong Nongdan trial is imminent, Samsung’s concerns about procuring an astronomical inheritance tax are also expected to grow.

Samsung Seocho office building [연합뉴스 자료사진]

According to the business community and the National Tax Service on the 21st, Chairman Lee Kun-hee’s inheritance tax based on the stock value is over 11 trillion won. Due to the recent share price hike, the detailed burden has grown significantly compared to the expectations two months ago.

In addition, the industry is predicting that an inheritance tax of at least 1 trillion won will be added when real estate such as Yongin land in the name of Chairman Lee Kun-hee and his home in Hannam-dong, Yongsan, and personal assets such as art works, bonds, and cash are added.

Chairman Lee Kun-hee’s legal heir is spouse Hong Ra-hee, former director of Leeum Museum of Art, son Lee Jae-yong, Samsung Electronics[005930] Vice-chairman, daughter Boo-jin Lee, Hotel Shilla[008770] The president and Lee Seo-hyun are the chairman of the Samsung Welfare Foundation. The legal inheritance is 1.5/4.5 for the spouse and 1/4.5 for the children.

However, considering the succession of the Samsung Group and double payment of inheritance tax in the future, experts predict that children such as Vice Chairman Lee Jae-yong, not Mrs. Hong Ra-hee, will likely inherit a lot of shares.

First, the survivors are expected to choose a method of paying the inheritance tax in installments (annuity payment) for up to five years.

Annuity payment is a method of paying a ‘1/6’ amount when reporting and paying, and applying 1.8% of annual interest to pay the remainder in installments for 5 years.

Inheritance tax resources are expected to be raised primarily by expanding dividends of affiliates.

Samsung Electronics is planning to finalize a new dividend scale and additional return plan in January next year as the recent three-year dividend policy is completed this year. The industry observes that “a breakthrough dividend policy proposal will come out.”

(Seoul = Yonhap News) The bereaved family members, including former Leeum Museum of Art Director Hong Ra-hee, Lee Jae-yong, vice chairman of Samsung Electronics, Lee Bu-jin, president of Hotel Shilla, and Lee Seo-hyun, president of Samsung Welfare Foundation, attending the ceremony of the late Samsung Group chairman Lee Kun-hee on October 28. [사진공동취재단)

(서울=연합뉴스) 지난 10월 28일 고(故) 이건희 삼성그룹 회장의 영결식에 참석하는 홍라희 전 리움미술관장과 이재용 삼성전자 부회장, 이부진 호텔신라 사장, 이서현 삼성복지재단 이사장 등 유족들 모습. [사진공동취재단)

그럼에도 부족한 상속세 조달을 위해 보유 지분을 담보로 대출을 받거나 지분을 매각할 가능성이 크다.

매년 2조원이 넘을 것으로 추정되는 상속세를 배당만으로 충당하기 어려워서다.

증권가에서는 이건희 회장이 보유한 삼성생명[032830] It is believed that the stake (20.76%) or Samsung SDS (9.2%) held by Vice Chairman Lee Jae-yong can be sold.

In the case of Samsung SDS, Samsung Electronics and Samsung C&T[028260]As they hold 22.58% and 17.08%, respectively, there is no problem in exercising management rights through a circular structure.

In particular, Samsung SDS is considered the most promising target for sale, as it is under the group’s governance structure and there have been concerns, such as the government’s tightening of regulations on’putting things away’. In contrast, there are many observations that Samsung Life Insurance’s stake will be held in consideration of increased dividends.

In the stock market, Samsung C&T will be given a stake in Samsung Electronics as a scenario to keep Samsung Electronics’ control and reduce the burden on the bereaved family.

Chairman Lee’s stake in Samsung Electronics is donated to Samsung C&T and the company pays 9 trillion won worth of inheritance tax.

Samsung has a circular governance structure that leads to’Vice Chairman Lee Jae-yong → Samsung C&T → Samsung Life → Samsung Electronics’.

As Vice Chairman Lee Jae-yong is Samsung C&T’s largest shareholder (17.3%), Samsung C&T can indirectly maintain Samsung Electronics’ control.

Lee Jae-yong (Seoul = Yonhap News) Reporter Han Sang-gyun = Lee Jae-yong, vice chairman of Samsung Electronics, is attending a continuing trial for the destruction of the'Gukjeong Nongdan' held at the Seoul High Court on the 21st.  2020.12.21 xyz@yna.co.kr

Lee Jae-yong (Seoul = Yonhap News) Reporter Han Sang-gyun = Lee Jae-yong, vice chairman of Samsung Electronics, is attending a continuing trial for the destruction of the’Gukjeong Nongdan’ held at the Seoul High Court on the 21st. 2020.12.21 [email protected]

Some have also raised the possibility of’payment’ to reduce the inheritance tax, but the possibility seems unlikely. The Inheritance Tax Act stipulates that securities listed on the stock exchange cannot be paid in return unless disposition is prohibited under the Capital Market Act.

If inherited property is contributed to a public interest corporation, the inheritance tax decreases as much, but it is observed that the possibility is not high when considering issues such as governance. A Samsung official predicted, “As the deadline for filing and payment of inheritance tax is until the end of April next year, we will consider various alternatives in the meantime.”

The possibility of a division between Vice Chairman Lee Jae-yong, Lee Bu-jin, and Lee Seo-hyun is also raised, but the possibility of realization is low, according to the industry.

An official in the securities industry said, “As Chairman Lee Kun-hee has struggled with the disease for more than six years, there is a high likelihood that the problem related to the group’s governance structure has become a traffic control,” he said. “There will be no significant change due to inheritance.”

In Samsung, vice chairman Lee Jae-yong is currently being tried in the case of Gukjeong Nongdan and the issue of illegal succession of management rights.

The revision of the insurance industry law, also known as the’Samsung Life Act’ promoted by the government and ruling party, is also expected to act as a variable for Vice Chairman Lee Jae-yong’s maintenance of management rights and governance structure.

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