[Editorial] Samsung Pays Off W12 Trillion Inheritance Tax in Full, a Chance to Reassess an Outdated Tax System

The Samsung family has paid in full the W12 trillion inheritance tax imposed on the estate of the late Chairman Lee Kun-hee over the past five years. The estate left by the late chairman, who died in 2020, was worth about W26 trillion, including stakes in affiliates and real estate. Starting in April of the following year, the heirs used the installment payment system and completed the payments in six rounds. It is the largest inheritance tax payment in South Korean history. The amount is three times the W3.9 trillion in total inheritance tax collected by the state in 2020, the year Lee died. It is also far larger than the W8.2 trillion inheritance tax burden in 2024.
By paying the largest inheritance tax bill ever in full, the Samsung family has also gone a long way toward easing negative perceptions of wealth being passed down across generations. In addition to the inheritance tax, the heirs donated W100 billion to build a hospital specializing in infectious diseases and to support children with cancer, in accordance with the late chairman’s wishes. They also donated more than 23,000 artworks to the state. The value of the so-called Lee Kun-hee Collection was estimated at up to W10 trillion. It drew strong interest from the overseas art world and the general public alike. In terms of balancing wealth succession with social contribution, it is a model worth recognizing as a good example of noblesse oblige.
With the Samsung family’s large tax payments now complete, it is also necessary to examine the competitiveness of South Korea’s inheritance tax law. Enacted in the 1950s, the Inheritance Tax and Gift Tax Act has seen only adjustments to deductions over the years, while its basic structure of taxing the entire estate has remained unchanged. It is well known that only a small number of the 38 OECD member countries tax the entire estate as South Korea does. Among the 24 member countries that levy inheritance tax, 20 tax the share actually received by the heir, known as an acquisition-based tax. An estate tax imposed on a family unit no longer fits the times, especially when the basic unit of life is no longer the family.
The harsh tax rate is another problem. South Korea’s top inheritance tax rate is 50 percent. When the premium valuation applied to shares held by the largest shareholder is added, the effective burden rises to as much as 60 percent. Samsung family’s W12 trillion inheritance tax also arose from this structure. Among OECD member countries, only Japan has a higher rate at 55 percent. South Korea’s current top rate of 50 percent and its tax brackets have remained virtually unchanged for more than 20 years since the 2000 revision. During that time, housing prices, corporate values and the size of capital markets have changed dramatically, but the tax system has stayed in the past. Even though the government belatedly acknowledged the need for reform and pushed for amendments, those efforts repeatedly failed.
Under the Yoon Suk Yeol administration, a tax reform bill was proposed to lower the top rate from 50 percent to 40 percent and expand child deductions, but it failed to pass the National Assembly of the Republic of Korea. A plan to shift to an acquisition-based tax was discussed in the National Assembly last year, but it made no progress because it clashed with proposals to expand deductions under the current estate-tax system. In the end, only the need for reform was confirmed, while nothing changed. Overseas institutions, including the OECD, have repeatedly pointed out that high inheritance taxes are one factor behind the undervaluation of the South Korean stock market. Tax reform is also necessary for the sustainable rise of the South Korean stock market, which has been setting new records day after day. It is time to stop leaving outdated tax rules and practices untouched and finally fix them.