Coupang headquarters. Yonhap News

The National Tax Service has launched an all-out special tax investigation into Coupang. While the investigation is ostensibly targeting its logistics subsidiary, Coupang Fulfillment Services (CFS), it is interpreted as a probe that will examine Coupang's overall business structure and even its transaction relationships with its US parent company, Coupang Inc.

According to industry sources on the 22nd, the Seoul Regional National Tax Office's Investigation Bureau 4 and the International Taxation Bureau deployed approximately 150 investigators to Coupang's Korean headquarters and Coupang Fulfillment Services in Songpa-gu, Seoul, this morning to secure accounting and internal transaction-related data.

Investigation Bureau 4 is an organization that is deployed not for routine tax investigations but when suspicions of tax evasion or abnormal fund flows are detected, and it is known as the "grim reaper of the business world." The fact that the International Taxation Bureau, which specializes in transfer pricing and transactions with foreign related parties of multinational corporations, was also deployed simultaneously lends weight to the view that this investigation is more than a mere routine inspection.

In particular, the involvement of the International Taxation Bureau suggests that the transaction structure between Coupang's US headquarters and its Korean subsidiary, whether profits have been transferred, and the method of calculating transfer prices are among the key investigation targets. Coupang Inc. is a US company that holds 100% of the shares of the Korean subsidiary, and it is analyzed that the entire group's fund flow and profit distribution structure will likely be subject to close scrutiny.

This tax investigation is also noteworthy as it has intensified following a series of controversies surrounding Coupang. Coupang has recently been embroiled in controversy over its scaled-back response to a massive personal information leak, and key executives, including Coupang Inc. Chairman Bom Kim, did not appear at a National Assembly hearing, drawing criticism for evading responsibility.

Subsequently, a hard-line stance against Coupang began to form centering on the government and the ruling party. The Fair Trade Commission's consideration of business suspension, the National Assembly's plan for additional hearings and charges, and the visible pressure from the executive branch have all contributed to this trend. Interpretations are emerging from within and outside the industry that this National Tax Service investigation is also proceeding within this context.

Regarding this investigation, the National Tax Service stated its principle position that "we cannot confirm whether a tax investigation is being conducted on an individual taxpayer or its specific details." However, given that Investigation Bureau 4 and the International Taxation Bureau were deployed simultaneously, the prevailing expectation is that a high-intensity verification of the cross-border transaction structure connecting Coupang and its US headquarters will be unavoidable.

However, some interpret this investigation as being related to the current government's foreign and industrial policy direction.

It is analyzed that the Lee Jae-myung administration, which is considered pro-China, is effectively condoning and supporting the establishment and market expansion of Chinese e-commerce companies like AliExpress and Temu in Korea, and by pressuring Coupang, a leading domestic e-commerce company, it may be undertaking preliminary work to restructure the distribution and platform market. Criticisms are also being raised that government power is applying strict standards to certain companies while showing a lenient attitude towards certain foreign companies.

By Reporter Jung Woo-seok