Tax Levy Prompts Threat

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Tax Levy Prompts Threat

Samsung Group may consider a lawsuit against the decision of the National Tax Service to tax buyers of bonds with warrants issued by an unlisted subsidiary, Samsung SDS, a Samsung official said Tuesday.

"The transfer was legal, and Samsung has decided to sue upon legal advice," said the official. Under the law, an objection must be sent to the tax service within 20 days from the day of notice of the assessment; the objection takes 30 days to process. If the objection is denied by the tax service and buyers are sent final notices of tax due, Samsung says it will file suit.

The service wants to tax six persons - Mr. Lee, son of Samsung's chairman Lee Kun-hee; his three sisters and two Samsung executives, all of whom purchased 3.21 million bonds with warrants in February 1999 for 23 billion won ($17.4 million). The tax service said the buyers benefited from the difference between the purchase price of 7,150 won and what the service said was the bonds' true value, 58,000 won. It ordered the six to pay 60 billion won in taxes. The bonds with warrants allow buyers to exchange their bonds for a given number of shares at a given price.

In a separate case, People's Solidarity for Participatory Democracy, a civic activist group, sued Samsung executives, including Kim Hong-ki, chief of Samsung SDS, for dereliction of duties. Samsung believes that the tax service calculated the tax amount based on the company's stock traded in the over-the-counter market, in this case among Samsung SDS' retirees who bought and sold shares over the Internet. The civic group made similar charges.

A Samsung SDS official said it calculated the bond price in accordance with inheritance laws, adding, "You can't estimate the stock price based on a small number of shares traded on the Internet."



by Hong Seung-il

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