The heirs of Samsung Group revealed on Wednesday that they would pay more than $10 billion in death duties—one of the world’s largest-ever inheritance tax settlements—and donate a collection of art that includes paintings by Monet and Picasso. Lee Kun-hee, the late chairman of Samsung Electronics, was the country’s richest man when he died last October at the age of 78 after years in the hospital, leaving a fortune of 22 trillion won ($19.6 billion).
South Korea’s strict inheritance tax rules and high rates have resulted in a hefty bill for the family, including Samsung Electronics vice chairman Lee Jae-yong, who is reportedly imprisoned for extortion, embezzlement, and other offences. According to Samsung, Lee’s family plans to pay over 12 trillion won in inheritance taxes, which is more than half of the amount of the late chairman’s total assets.
The payment of inheritance tax is one of the largest in Korea ever and globally, the Lee Family said, at the starting of this month, will pay it in six instalments. According to the document, the properties include shares in Samsung Electronics, Samsung Life and Samsung C&T, and property. In addition, the late president left a collection of antiques and artworks worth two to three trillion won. Samsung said approximately 23,000 objects from Lee’s collection are to be donated, including 14 items that will be showcased at Korea’s National Museum as national treasures. The National Museum of Modern and Contemporary Art will receive donations of works by western artists, including Claude Monet’s water-lilies, Salvador Dali’s Marsupial Centaurs family and works by Pablo Picasso, Paul Gauguin, Joan Miro and others. Art contributions are reported to minimize the tax liability of the family.
Kim Dae-jong, a business teacher at Sejong University in Seoul, said Samsung carried out a realistic calculation on donating late works of Lee’s works of art. If they had not decided to donate his will but to forward the liability to their kids, the inheritance would have been huge. It would have been subject to high inheritance tax if they had not decided to donate them and instead give them to their children to inherit. They don’t have to pay the tax because they donate such high-value works while still doing general public service. Another 1 trillion won will be donated to health-related causes, with half of the amount going toward the construction of South Korea’s first specialist infectious disease hospital.
Samsung, whose flagship arm is one of the world’s largest smartphone and computer chip manufacturers, is by far the largest of the chaebols, or family-led conglomerates, that dominate business in South Korea, the world’s 12th-largest economy. The conglomerate is crucial to the country’s economic well-being; its total revenue accounts for a quarter of the country’s GDP.
Lee Jae-yong, the late chairman’s eldest son and the group’s de facto boss, was sentenced to prison in January for his role in the sprawling corruption crisis that took former President Park Geun-hye down. He is now facing a separate trial for stock manipulation, which analysts argue was crucial to the conglomerate’s smooth power transition. On Wednesday, online commentators called for his release, with one posting on Naver, the largest portal in the South, saying: Please release Lee Jae-yong now, after what Samsung has done for the public. Five big South Korean corporate organizations petitioned the presidential Blue House for his pardon on national economic grounds earlier this week. However, an official told reporters that the government has not considered granting him a pardon so far and had no plans to do so in the near future. Last May, Lee apologised for some of the group’s governance challenges, promising that there will be no further controversy over succession.
