Coupang under investigation for potential tax evasion

The National Tax Service launched an investigation into Coupang for potential offshore tax evasion.

Coupang’s headquarters office in Songpa District, southern Seoul [NEWS1]

Korea’s tax agency launched an investigation into Coupang last month regarding a potential offshore tax evasion scheme between the firm and its Delaware-based parent company.

The National Tax Service (NTS) opened the tax investigation in April, a Coupang spokesperson said Monday.

The spokesperson said that the probe was part of a commonplace tax audit and denied that it was related to offshore tax evasion.

The tax agency reportedly conducted the on-the-spot inspection at Coupang’s headquarters office in Songpa District, southern Seoul, as part of its offshore tax evasion investigation, according to Korean media.

Delaware-based Coupang Inc. owns a 100 percent stake in Coupang. A large proportion of U.S. companies incorporate in the state, which has low corporate tax rates compared to the rest of the nation.

The NTS has recently strengthened its crackdown on offshore tax evasion. “We will ramp up our investigation into cases such as offshore tax evasion,” NTS Commissioner Kim Chang-ki said in his January New Year's address.

Korea’s Fair Trade Commission conducted an on-site investigation into Coupang on May 7 over allegations that it had not properly informed its paying subscribers about its moderate cancellation policy, which allowed for a partial refund of membership fees.

Coupang is also suspected of having manipulated its search algorithms to make its own products appear at the top of the page on its platform, prioritizing its private brand items.

BY CHOI HAE-JIN [choi.haejin@joongang.co.kr]