Record tax paid out by Shinsegae’s owners

The majority shareholders of retail giant Shinsegae Co. have paid the highest gift tax in Korean history, the company announced yesterday. The 350 billion won ($370 million) in stock the Chung family handed over to the National Tax Service is almost double the previous high of 183 billion won from the family of Kyobo Life Insurance founder Shin Yong-ho.
Shinsegae, Korea’s largest retailer, said that Chung Yong-jin, its vice chairman, relinquished 377,400 Shinsegae shares from the total of 840,000 shares he received last year from his father, Chung Jae-un, the honorary chairman of the company.
Chung Yu-gyeong, the younger sister of the vice chairman and managing director of Shinsegae, kicked in 285,556 shares worth 150 billion won from 634,571 shares transferred by her father. As a result, the Chung family shares decreased from 28.7 percent of the company to 25.2 percent.
Mr. Chung and Ms. Chung will have 7.3 and 2.5 percent of the company, respectively. Chung Jae-un has no Shinsegae shares, while his wife and Shinsegae Chairwoman Lee Myung-hee, the younger sister of Samsung Group chairman Lee Kun-hee, controls a 15.3 percent stake.
“Whether the Chung family paid the taxes voluntarily or not, by doing so it acts as leverage in raising the transparency and credibility of the company,” said Lee Un-taek, an analyst at Daetoo Investment and Security. “The total gift tax the Chung family has to pay when Lee Myung-hee gives away her stake to her children will reach 1 trillion won.” Gift tax must be paid when the younger generation receives shares or money as a gift from their parents.
Lee Jae-yong, cousin of Chung Yong-jin and managing director of Samsung Electronics Co., paid 28 billion won to the government in taxes from 1996 to 2005. Another Chung family, the majority shareholders of Hyundai Motor Co., were investigated by prosecutors on charges related to the gift tax last year, but no indictment was handed down. However, Chung Mong-koo, the chairman of Hyundai Motor Group and his son, Chung Eui-sun, gave up Glovis shares worth 1 trillion won at the time they were being investigated. Glovis is the logistics arm of Hyundai Automotive Group.

By Hwang Young-jin Staff Writer [yhwang@joongang.co.kr]