Late Chairman Lee Geonhee's inheritance tax alone 12 trillion won... No inheritance tax exceeding 10 trillion won worldwide

The Largest Scale Domestically and Internationally, Korea's World-Class Highest Inheritance Tax Rate Is the Cause

the late Lee Kun-hee, Chairman of Samsung

[Asia Economy Reporter Changhwan Lee] The family of the late Samsung Chairman Lee Kun-hee has decided to pay inheritance tax exceeding 12 trillion won, setting a new record in the history of global inheritance taxes. This is the largest inheritance tax not only in South Korea but also worldwide.

This event is expected to strengthen calls for reforming South Korea's inheritance tax system, which has one of the highest inheritance tax rates in the world.

According to Samsung on the 28th, Lee's family has decided to pay at least 12 trillion won in inheritance tax on his estate. This inheritance tax is understood to be the largest in both domestic and international history.

Domestically, the largest inheritance tax previously was 921.5 billion won paid by Koo Kwang-mo, chairman of LG Group, who inherited assets from his late father Koo Bon-moo, former LG Group chairman, in 2018. Before that, the highest was 183 billion won paid by special related parties including Shin Chang-jae, chairman of Kyobo Life Insurance.

The Samsung family's inheritance tax this time is an unprecedentedly huge amount even on a global scale. It is reported that no advanced countries such as the United States, Japan, or Europe have yet seen inheritance taxes exceeding 10 trillion won.

Controversy Over South Korea's World-Highest Inheritance Tax Rate

Although Chairman Lee was not the world's richest person, the inheritance tax is the largest globally due to South Korea's punitive inheritance tax system. According to the Korea Economic Research Institute, South Korea's top inheritance tax rate is 50%, ranking second highest among OECD countries after Japan (55%).

However, when the largest shareholder of a company inherits shares, a 20% premium is applied to the stock value, raising the effective tax rate to as high as 60%, making it effectively the highest in the world.

Comparing with other countries, it is easy to see how high South Korea's inheritance tax rate is. Based on effective tax rates, the United States has a top inheritance tax rate of 39.9%, Germany 30%, and the United Kingdom 20%. Canada’s rate is only 16.5%, and Australia and Sweden apply a capital gains tax system (succession acquisition taxation) that defers taxation until the inherited assets are disposed of, effectively resulting in no inheritance tax.

This Samsung inheritance tax payment is expected to bolster arguments for reforming South Korea's inheritance tax system, which is among the highest in the world. Excessive inheritance taxes can destabilize corporate management rights, suppress business operations, and potentially weaken entrepreneurs' spirit.

In fact, there have been many cases where companies themselves became insolvent due to inheritance tax burdens. The world's number one nail clipper manufacturer, Three Seven, sold all its shares in 2008 due to inheritance tax and fell into deficit. The world's number one condom manufacturer, Unidus, handed over management rights to a private equity fund in 2017 citing inheritance tax burdens.

Lim Dong-won, a senior researcher at the Korea Economic Research Institute, emphasized, "Excessive inheritance tax burdens create tax barriers during corporate succession," adding, "Excessive inheritance tax burdens not only reduce inherited assets but also make management succession uncertain, which may weaken entrepreneurial spirit."

This content was produced with the assistance of AI translation services.