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Samsung boosts dividends as family faces giant tax bill

Business

Samsung boosts dividends as family faces giant tax bill

By Agence France-Presse

SEOUL(AFP) - 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 $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 program.

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 percent -- plus a 20 percent surcharge on stocks he held as the largest shareholder in a firm.

Reports have estimated that around 11.4 trillion won ($10.2 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 fourth-quarter net profits up by more than a quarter year-on-year Thursday, with coronavirus-driven working from home boosting demand for devices powered by its chips.

Samsung Electronics said profits rose 26.4 percent in October to December on a year earlier to 6.61 trillion won ($5.97 billion), led by display and memory chip businesses.

Operating profit rose 26.4 percent to 9.05 trillion won, while sales were also up 2.8 percent at 61.55 trillion won.

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