Samsung boosts dividends as family faces giant tax bill

[SEOUL] Samsung Electronics on Thursday 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 US$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.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

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.

AFP