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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] South Korean operations of Coupang transferred approximately KRW 900 billion (USD ~670 million) to the United States in 2024—an amount exceeding the company’s net profit generated in Korea—prompting concerns that profits earned in the Korean market are being shifted to Coupang Inc. through cost structures rather than dividends.
According to an analysis by Yonhap News Agency of Coupang Korea’s 2024 audit report released on February 1, payments made to related parties—including Coupang Inc.—under the label of “expenses” surged nearly sixfold over five years, rising from KRW 150.34 billion in 2020 to KRW 939.05 billion in 2024. Total payments over the past five years exceeded KRW 2.5 trillion.
Coupang Korea recorded revenue of KRW 41.29 trillion in 2024. After deducting merchandise purchases, logistics and operating costs, and taxes, net profit remaining in Korea amounted to KRW 784.9 billion. Payments to overseas related parties thus exceeded domestic net profit by more than KRW 150 billion. The audit report, however, provides only broad expense categories, making it difficult to verify whether service fees or royalties were calculated at fair market value.
While recovering investment capital is standard practice, critics argue that revenues and performance generated in Korea are being transferred to the U.S. parent company in the form of pre-tax expenses—such as management consulting fees and information technology charges—rather than post-tax dividends. This structure has fueled allegations of potential tax avoidance through profit shifting.
Further criticism centers on Coupang’s corporate structure. Although more than 90% of its revenue is generated in Korea, the company established Coupang Inc. as its parent entity and headquartered it in Delaware, a jurisdiction known for having no corporate income tax and business-friendly courts, making it a popular choice for global corporations.
Separately, Coupang has reportedly spent a total of USD 10.15 million on lobbying activities in the United States from 2021 through last year.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
