Gifting of Top Korean Conglomerates' Ownership Costly
The tax burden for the average Korean conglomerate’s inheritor is approaching tens of billions of won as the amount of gifts from owners and parents has surged.
Chung Sang-yung, honorary chairman of Kumgang Korea Chemical (KCC), gave company stocks amounting to 98.1 billion won (7.35 percent stakes) to three of his sons, including Chung Mong-jin. Chung Sang-yung is a younger brother of the late Hyundai Group founder Chung Ju Yung.
Mong-jin, has become the majority shareholder of KCC on the back of the stock transfer, with the amount of gift taxes charged on Chung’s three sons totaling 40 billion won.
Chung Ju Yung’s son and Hyundai Department Store chairman Chung Mong-keon has given 2.15 million shares (a 9.58 percent stake) to his son Ji-sun, vice chairman of the company. Taxes for the donation reached 30 billion won.
In addition, Korean Dongwon Group chairman Kim Jae-chol handed over 4.33 million shares worth 28.5 billion won to his son Nam-goo, president of Dongwon Securities.
Dongbu Group chairman Kim Joon-ky made a similar inter-family stock donation.
The inter-family stock transfers are made to ensure the succession of management rights, it is expected that most inheritors will not pay gift taxes for selling the stocks.
The tax rates on donations go up to 50 percent of the inherited amount, while those who voluntarily report their taxes within three months can enjoy a deduction of about 10 percentage points (to 40 percent).
Officials at the conglomerates predict the inheritors will pay the taxes with properties, such as stock dividends from investing in affiliates and real estate.
Chung Sang-yung, honorary chairman of Kumgang Korea Chemical (KCC), gave company stocks amounting to 98.1 billion won (7.35 percent stakes) to three of his sons, including Chung Mong-jin. Chung Sang-yung is a younger brother of the late Hyundai Group founder Chung Ju Yung.
Mong-jin, has become the majority shareholder of KCC on the back of the stock transfer, with the amount of gift taxes charged on Chung’s three sons totaling 40 billion won.
Chung Ju Yung’s son and Hyundai Department Store chairman Chung Mong-keon has given 2.15 million shares (a 9.58 percent stake) to his son Ji-sun, vice chairman of the company. Taxes for the donation reached 30 billion won.
In addition, Korean Dongwon Group chairman Kim Jae-chol handed over 4.33 million shares worth 28.5 billion won to his son Nam-goo, president of Dongwon Securities.
Dongbu Group chairman Kim Joon-ky made a similar inter-family stock donation.
The inter-family stock transfers are made to ensure the succession of management rights, it is expected that most inheritors will not pay gift taxes for selling the stocks.
The tax rates on donations go up to 50 percent of the inherited amount, while those who voluntarily report their taxes within three months can enjoy a deduction of about 10 percentage points (to 40 percent).
Officials at the conglomerates predict the inheritors will pay the taxes with properties, such as stock dividends from investing in affiliates and real estate.
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