Success never seems to come without challenges – and for the Lee family in Korea, there have been many.
The family behind the Samsung empire, one of the world’s largest and most prominent multi-national conglomerates, has dealt with succession battles, sibling rivalries, espionage, bribery and tax evasion. (We spotlighted some of these difficulties in our original profile of the Lees, Challenges in the Samsung empire, back in 2018.)
And now we have a further update to our first story. The recent passing of Lee Kun-hee – the man who helped transform Samsung into a global technology powerhouse – adds yet another challenge for the Lee family and the Samsung business: an inheritance tax bill of nearly $11 billion USD.
The inheritance tax rate is between 10% and 50% in Korea (compared to Canada’s relatively benign capital gains tax of 27%). However, Lee Kun-hee was a major shareholder of Samsung, which (according to Korea’s law) raises the inheritance tax to 60%.
The Lees are now left to pay one of the world’s largest-ever inheritance tax bills, with only five years to complete the full payment. (They’ve agreed to pay in six installments.)
How will the family raise the funds to pay this massive tax bill?
There have been a number of developments.
- First, the Lees borrowed a total of $356 million USD from two South Korean banks to complete the first instalment on April 30. This is according to multiple sources, including the Korea Times.
- Next, the family reduced the taxable portions of Lee Kun-hee’s estate by donating his vast collection of more than 23,000 artworks, including masterpieces by Picasso, Salvador Dalí and Monet (in addition to many celebrated Korean artists) to various national and provincial museums in South Korea.
- In addition, the Lees have donated $900 million USD towards the building of South Korea’s first hospital for infectious diseases, as well as to vaccine research and to cover expenses for children afflicted by cancer or other rare diseases.
There is much more to come.
An inheritance tax bill of this magnitude could bring more challenges for the Lees, potentially resulting in changes to its governance, ownership of Samsung and its future succession plans; something we would not want to see happen to any of our successful Canadian companies, founded and built here.
In the meantime, here are more details on the evolving developments in the Lee family (and Samsung) from the Korea Times.
Christina Outridge is a Marketing & Research Analyst at Creaghan McConnell Group.