[Economic Outlook] Will the 300 Million KRW Threshold for Major Shareholders Be Adjusted... What About the Current Account Surplus?

The Bank of Korea to Announce 'September Balance of Payments Preliminary Figures' on the 5th... Surplus Expected to Widen

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The ruling party and the government will continue discussions this week on controversial policies such as strengthening capital gains tax on stocks and easing property tax for single-homeowners. Attention is focused on whether the government will change its stance on maintaining the 300 million KRW threshold for major shareholders.

There is also interest in whether the recession-type current account surplus, caused by a significant drop in income amid economic downturn, will continue for a fifth consecutive month.

Both ruling and opposition parties oppose the 300 million KRW threshold for major shareholders. The Democratic Party proposes postponing the plan to strengthen the major shareholder threshold for capital gains tax from 1 billion KRW to 300 million KRW. On the other hand, the government intends to implement the 300 million KRW threshold as scheduled but abolish the existing family aggregation system to tax individuals separately.

The property tax relief plan for single-homeowners also requires deciding where to set the baseline. The ruling party considers publicly announced prices of 900 million KRW as the cutoff for mid-to-low priced homes eligible for tax relief, while the government and the Blue House view 600 million KRW as the standard.

On the 3rd, Statistics Korea will release the consumer price statistics for October. Since exports rebounded last month, the current account surplus is expected to widen further.

The Bank of Korea will announce the 'Preliminary Balance of Payments for September 2020' on the 5th. The current account surplus in August was 6.57 billion USD, marking a surplus for four consecutive months since May. However, the trend of a 'recession-type surplus,' where imports decreased more than exports, continued.

In September, with exports rebounding for the first time in seven months, the recession-type surplus trend is expected to break, and the surplus is likely to expand significantly. The Bank of Korea expects that if this trend continues, the annual current account surplus forecast of 54 billion USD will be comfortably achieved.

This content was produced with the assistance of AI translation services.