Samsung Boosts Dividends As Ruling Family Faces Giant Tax Bill

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 their regular payment -- and more than four times higher -- as part of its full-year results.

The special payout was part of a previously-announced plan, but Yonhap news agency reported the amount was "far higher than the market estimate".

The tech giant -- the world's largest maker of smartphones and memory chips -- also announced a new increased three-year shareholder return programme.

Analysts say the payments will help the conglomerate's heirs -- including Samsung Electronics vice-chairman and de facto leader Lee Jae-yong -- meet a gargantuan tax bill.

Under South Korean law, Lee Kun-hee's estate is taxed at 50 percent -- in addition to 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 this month reported a 26 percent jump in fourth quarter net profit from a year earlier, but warned of ongoing uncertainties over the pandemic and lower earnings in the first quarter of 2021 owing to falling prices.

Lee Jae-yong is currently in prison after being 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 at the top of the company.