Samsung Group family borrows $3 bn to pay inheritance tax

[Photo by Lee Seung-hwan]

The family of late Samsung Group Chairman Lee Kun-hee has borrowed a staggering 4 trillion won ($3.07 billion) to pay the 12 trillion won in inheritance tax after Lee passed away three years ago.

According to the electronic disclosure by the Financial Supervisory Service on Tuesday, Lee’s widow Hong Ra-hee, former director of the Leeum, Samsung Museum of Art, Lee’s eldest daughter Lee Boo-jin, chief executive officer of Hotel Shilla, and second daughter Lee Seo-hyun, head of Samsung Welfare Foundation, recently obtained stock-backed loans from banks.

The loans were secured by the three family members with Samsung Electronics Co. shares as collateral. Hong borrowed 1.4 trillion won, Boo-jin 517 billion won, and Seo-hyun 190 billion won.

In total, the three family members have borrowed a total of 4.08 trillion won.

They need these substantial loans to cover the hefty 12 trillion won inheritance tax. The bereaved family members have been paying the inheritance tax in installments over a five-year period starting from April 2021. The total amount paid so far is estimated to be 6 trillion won.

With a global trend of rising interest rates, the interest burden on the family members has grown. The interest rate for the stock-backed loans obtained by the three women is 5 percent per annum, resulting in an annual interest payment exceeding 200 billion won.

To secure funds for the inheritance tax, the family members have partially divested their ownership of Samsung-affiliated companies’ stocks.

Hong sold about 20 million shares of Samsung Electronics in March last year, while Boo-jin sold about 1.5 million shares of Samsung SDS Co. Seo-hyun sold 3 million shares of Samsung SDS and 3.5 million shares of Samsung Life Insurance Co.

The family members have been busy raising funds for the inheritance tax after Samsung Group made significant social contributions. The family already donated more than 23,000 artworks to state institutions, a large part of Lee Kun-hee’s legacy.