Li Jianxi’s heirs face $10 billion in inheritance tax or cash payments to follow LG’s example

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Lee Kun hee, chairman of Samsung Electronics
It is reported that the heirs of Lee Kun hee, Samsung’s chairman, could face an estate tax of about $10bn. But that doesn’t necessarily mean they have to sell their shares to pay the huge tax, thereby giving up control of Samsung.
Li Jianxi died at the age of 78 at Samsung hospital in Seoul on October 25. Data show that South Korea’s richest man has about $20.7 billion in wealth, most of which is Lee’s stake in Samsung’s four divisions.
Currently, South Korea imposes a tax of up to 60% on inherited shares of major shareholders and 50% on real estate and other assets. Based on Friday’s closing price, the Lee Kin hee family may owe about $10 billion in inheritance taxes, possibly the largest in South Korea.
Seoul Based Business Analytics Chaebul.com Chung sun sup, CEO, said it was unlikely that Mr Lee’s successor would finance the fee by selling shares. Earlier today, analysts said Samsung was likely to raise its dividend to help heirs pay the estate tax. The news once stimulated Samsung’s share price to rise.
“Selling the shares could cause trouble because it would weaken the Li Jianxi family’s control over the group,” Zheng said. No enterprise group will do so. Instead, most choose to pay cash over a five-year span. Cash can be prepared by way of dividends or salaries. ”
In 2018, after Koo Bon moo, chairman of LG, died of illness, his son, Koo Kwang Mo, paid the estate tax in this way. Koo Kwang Mo and other family members paid 921.5 billion won (US $817 million) in taxes over five years.
Samsung declined to comment on how to distribute the huge wealth left by Li Jianxi and how to pay the inheritance tax, saying only that “all taxes related to the legacy will be paid transparently in accordance with the legal requirements.”
It is reported that Li Jianxi’s shares include about 4% of Samsung Electronics and 21% of Samsung Life Insurance Company, which is the second largest shareholder of Samsung Electronics (8.24%).
His only son, Jay y. Lee, has been leading the Samsung Group since a heart attack in 2014 left him unable to work. Jongwoo Yoo, an analyst at Korea Investment & securities, believes that if Mr Lee succeeds to all of the shares, he may use dividends and financing from family members to pay taxes.
“It is not clear how much cash assets the Li Jianxi family currently holds, but the dividend income will not be sufficient to cover the tax,” said jongwoo Yoo. Therefore, it is also possible to rely on personal financing. ”
At present, although Li Zai Rong holds less than 1% of the shares of Samsung Electronics, he has obtained 17% control of Samsung products through the trade union, and Samsung products directly holds 5% of the shares of Samsung.
Chaebul.com CEO Cheng Shanzhu said Li’s successors need to prove that they have the ability to bring about change. In recent years, after a series of corruption scandals, some business groups in South Korea are often attacked. “So it’s important to see how the Samsung family will deal with the issue of inheritance,” he said