Of recent, wealth transfer issues have surfaced in Korea. Most of the families connected with top Korean conglomerates are under attack for their tactics to transfer family ownership from one generation to the next.
Shinsegae is addressing the issue boldly.
Korean media notes...
Shinsegae Group, Korea's leading department store and retail outlet operator, said it is willing to pay 1 trillion won [$1 billion] in gift and inheritance taxes.
The announcement came as Shinsegae is expected to eventually transfer the group's management control to heir-apparent Chung Yong-jin, vice-chairman of the nation’s largest discount store chain.
As I noted...
Most of Korea's family-controlled chaebol have been accused of illegally transferring wealth and management control to group owners'’ offspring evading the appropriate taxes.
The large shareholders are preparing for an exemplary transfer of management control. Shinsegae is ready to pay a surprising amount of tax said Shinsegae CEO Koo Hak-su at a press meeting held in Shanghai Saturday after the opening ceremony of the fifth shop of the company'’s retail outlet E-mart.
By paying taxes in an orderly fashion, Shinsegae's large shareholders want to wipe out negative notions on the succession of management control to second and third generations.
It will be the largest amount of gift and inheritance taxes ever paid by a South Korean conglomerate.
Koo said the shares of Shinsegae Group’s Chairwoman Lee Myung-hee and Honorary Chairman Chung Je-eun are valued at around 2 trillion won. Interestingly, the senior Chung and Lee, who is the younger sister of Samsung Group chairman Lee Kun-hee, hold 23 percent of Shinsegae shares with an estimated value of 1.98 trillion won. If they hand them all over to the junior Chung, tax is estimated to be around 991 billion won, 50 percent of the total. The junior Chung currently holds a 5 percent stake in Shinsegae. NOTE in Korea the tax is 50%, the reason most look to avoid such a burden.
Koo said the two might start handing over shares to Vice-chairman Chung Yong-jin, their eldest son, from this autumn at the earliest.
The highest inheritance tax paid in Korea to date is the 135.5 billion won tax paid by the family of the late Taihan Electric Wire President Seol Won-ryang. >>>Shinsegae plans to pay over seven times that figure. <<<
The announcement came after Shinsegae's conflict with a civic group over allegations that it had illegally transferred wealth to the junior Chung. The People'’s Solidarity for Participatory Democracy (PSPD), one of the country’s most influential civic groups, filed a complaint against the board members of Shinsegae.