Samsung boosts dividends as Lee family faces giant tax bill

SEOUL – Samsung Electronics on Thursday (Jan 28) announced plans for a huge one-off dividend payment for shareholders with its controlling family facing a multi-billion-dollar inheritance tax bill.

Chairman Lee Kun-hee, the richest man in South Korea, left his children a monumental fortune when he died in October, along with a tax tab reported to be more than $10 billion.

The group’s flagship subsidiary Samsung Electronics said it would give a “one-time special cash dividend” to shareholders on top of the regular payment – and more than four times higher – as part of its full-year results.

It also announced a new increased three-year shareholder return programme.

Analysts say the plan will help the Samsung heirs – including Samsung Electronics vice-chairman and de facto leader Lee Jae-yong – pay the gargantuan tax bill.

Under South Korean law, Lee Kun-hee’s estate is taxed at 50 per cent – plus a 20 per cent surcharge on stocks he held as the largest shareholder in a firm.

Reports have estimated that around 11.4 trillion won (S$13.6 billion) in inheritance taxes will be due on the late patriarch’s stock assets alone.

“Samsung C&T is one of the biggest shareholders of Samsung Electronics and Lee Jae-yong is the biggest shareholder of Samsung C&T,” said Kim Dae-jong, a business professor at Sejong University.

“Around 2,000 won per share is an astonishing amount and it will greatly ease the burden of inheritance tax,” he added.

Samsung reported a 26 per cent jump in fourth quarter net profit from a year earlier, but warned of ongoing uncertainties over the pandemic, and lower profits in the first quarter of 2021 owing to falling prices.

Lee Jae-yong is currently in prison after he was sentenced to two and a half years last week in a retrial over a sprawling corruption scandal, a ruling that analysts say could complicate the decision-making process for the world’s biggest maker of smartphones and memory chips.