While the federal estate tax is a huge point of contention in American politics, the heirs of the Samsung Group patriarch Lee Kun-hee are facing an inheritance tax that makes US federal estate tax revenue look relatively tame. Lee’s current assets are held mostly in shares of Samsung Electronics and Samsung Life Insurance, with a market value of around 13 trillion won ($12.7 billion). In South Korea, the top tier inheritance tax rate is 50%, and therefore his son and two daughters could be staring at a $6 billion tax. Moreover, typical deductions would do little to reduce the potential tax liability. In comparison, the United States collected just $16 billion in estate tax this year, and South Korea collected just $1.7 trillion won in 2012. More troubling for the heirs is the fact that any other attempts at restructuring or otherwise reducing tax liability would loosen the family’s control over the Samsung Group itself.
See Se Young Lee, “For Samsung Heirs, Little Choice But to Grin and Bear Likely $6 Billion Tax Bill,” Reuters.com (Jun. 05, 2014).
Posted by Morgan Yuan, Esq., Associate Editor, Wealth Strategies Journal.