Korea’s high inheritance tax come under controversies again
The two daughters of the late Nexon founder Kim Jung-ju paid their inheritance tax with the gaming giant’s shares so that the South Korean government became the firm’s second-largest shareholder.
NXC, the holding company of Nexon, said on May 31 in a regulatory filing that the two daughters had offered 29.3 percent of NXC shares to Korea’s Ministry of Economy and Finance.
The largest shareholder of NXC is Kim’s wife Yoo Jung-hyun, who owns a 34 percent stake in the corporation.
Nexon founder Kim passed away this February so that Yoo and two teenage daughters inherited his wealth of more than $10 billion, including 67.49 percent of NXC share.
In particular, the two daughters received 16.81 percent of the NXC shares, respectively. And most of them were used to pay Korea’s high inheritance tax.
Korea’s maximum inheritance tax rate is 50%, the second highest among the Organization for Economic Cooperation and Development (OECD) member countries, following just Japan with 55 percent.
But the rate can rise as high as 60 percent for stock inheritance from major shareholders.
This compares to the average rate of OECD member states is 25 percent, according to the Korea Economic Research Institute last year.
When Samsung Group Chairman Lee Kun-hee died in late 2020, the bereaved family also became subject to more than $9.15 billion in inheritance taxes.
This prompted Lee’s second daughter, former Samsung C&T president, to sell off her Samsung shares.
“It is not an easy task to revise the inheritance tax system. But we can now consider giving benefits to businesspeople who pay taxes properly and contribute to the country’s economy for a long time,” Yonsei University business Professor Sung Tae-yoon said.
Nexon is now based in Tokyo where the firm went public in 2011. It has come up with such megahits as KartRider, Dungeon & Fighter, MapleStory, and Sudden Attack.