The Korean unit of online retailer Coupang transferred more than 900 billion won ($620 million) in expenses to its US headquarters in 2024, according to an audit report. These related-party expenses, including service fees and royalties, totaled over 2.5 trillion won from 2020 to 2024. Tax authorities are investigating the transactions amid concerns over potential tax avoidance.
The Korean unit of online retailer Coupang transferred 939 billion won in related-party expenses to its US headquarters and other US-based companies in 2024, according to an industry report analyzed by Yonhap News Agency. The company's audit report confirms this figure, with cumulative transfers including service fees and royalties exceeding 2.5 trillion won from 2020 to 2024.
The report offers only broad expense categories, complicating assessments of whether the fees were set at fair market value. Industry observers worry that the arrangement might be structured to diminish profits at the Korean entity while bolstering assets at the US parent. Questions have also arisen about whether the opacity in calculating these funds signals efforts to minimize tax liabilities in both South Korea and the US.
"Dividends are clearly taxable, but service fees and royalties are areas where determining appropriateness is difficult, which is why tax avoidance controversies repeatedly arise," an anonymous tax expert said. "Transparency is especially important when transactions involve a parent company."
South Korea's tax authorities have initiated a detailed probe into Coupang, encompassing dealings with its US headquarters. This scrutiny intensifies following a data breach that regulators estimate affected nearly 33 million users, though Coupang maintains only about 3,000 accounts were compromised—a claim contested by officials.
