Business

Samsung boosts its profits as the family faces a hefty tax bill

Samsung is the strongest conglomerate in South Korea. (AFP photo)

SEOUL: Samsung Electronics announced plans on Thursday to pay huge one-off dividends to shareholders with its controlling family facing billions of dollars in inheritance tax bill.

President Lee Kun-hee, the richest man in South Korea, left his children an enormous fortune when he passed away in October, along with a tax mark that was said to have exceeded $ 10 billion.

The group’s subsidiary Samsung Electronics said it will give “one-time special cash dividends” to shareholders in addition to a regular payment – and more than fourfold – as part of its full-year results.

It also announced an increase in its shareholder return program for a period of three years.

Analysts say the plan will help Samsung’s inheritors – including Samsung’s vice president of electronics and de facto leader Lee Jae Young – pay the hefty tax bill.

Under South Korean law, Lee Kun-hee is levied a 50% property tax – plus an additional 20% fee for the shares he owns as the largest shareholder in a company.

Reports estimated that about $ 10.2 billion in inheritance taxes would be owed on the assets of the late patriarch alone.

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

“About 2,000 won per share is a staggering amount, and it will greatly reduce the burden of inheritance tax,” he added.

Samsung reported a 26% jump in fourth-quarter net profit compared to the previous year, but warned of lingering uncertainty over the pandemic and falling profits in the first quarter of 2021 due to lower prices.

Lee Jae-yong is currently in jail after being sentenced to two and a half years in prison last week at his retrial over a sprawling corruption scandal, a ruling that analysts say could complicate the decision-making process of the world’s largest smartphone and memory maker. Chips.

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