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Shinsegae heirs expected to pay W300b in gift taxes

Shinsegae Group heirs Chung Yong-jin and Chung Yoo-kyung (Yonhap)
Shinsegae Group heirs Chung Yong-jin and Chung Yoo-kyung (Yonhap)
As Shinsegae Group heirs Chung Yong-jin and Chung Yoo-kyung became the largest shareholders of the group’s retail and department store units, respectively, upon receiving shares as gifts from their mother, they are expected to pay a combined 300 billion won ($256 million) in gift taxes, according to the industry.

According to a regulatory filing on Monday afternoon, Shinsegae Group Chairwoman Lee Myung-Hee donated an 8.22 percent stake in E-mart to her son, Yong-jin, and an 8.22 percent stake in the Shinsegae department store chain to her daughter, Yoo-kyung.

Based on the closing price of 141,500 won per share for E-mart and 208,500 won per share for Shinsegae on Monday, Yong-jin’s gift is worth 324.4 billion won and Yoo-kyung’s is worth 168.8 billion won.

Under the nation’s inheritance and gift tax law, a 20 percent premium rate applies to transactions involving the largest shareholder’s stock. And if the value of a gift exceeds 3 billion won, a 50 percent tax rate is imposed.

That means Yong-jin will be taxed on 120 percent of the 324.4 billion won, or 389.2 billion won. His tax payment is half that amount, or 194.6 billion won. Yoo-kyung’s tax payment is 101.2 billion won using the same formula.

When progressive deductions -- which are applied to more than 3 billion won of taxes -- are factored in, Yong-jin and Yoo-kyung’s tax payments will be reduced to about 119.1 billion won and 100.7 billion won, respectively.

Upon the donation, Yong-jin’s stake in E-mart rose to 18.55 percent from 10.33 percent, while Yoo-kyung’s stake in Shinsegae rose to 18.56 percent from 10.34 percent, making them the largest shareholders. Lee’s stakes have been reduced from 18.22 percent in E-mart and 18.22 percent in Shinsegae to 10 percent in each company.

Shinsegae Group said, “Chairperson Lee judged that responsible management of each company has become more important for the group’s continued growth at a time when uncertainties in the business environment are increasing due to the pandemic and decided to give them to preemptively respond to the group’s continued growth.” 

By Shin Ji-hye (shinjh@heraldcorp.com)

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