Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes Our tax provision for income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. No income tax benefit was accrued for certain jurisdictions where we anticipate incurring a loss during the full fiscal year as the related deferred tax assets were fully offset by a valuation allowance. Our resulting effective tax rate differs from the applicable statutory rate, primarily due to tax credits, U.S. taxes on foreign earnings such as the inclusion of the NCTI provisions, the valuation allowance against deferred tax assets in loss making jurisdictions, and other permanent differences. Our tax provision for income taxes for the three and nine months ended September 30, 2026 was unfavorably impacted by losses before income taxes in certain jurisdictions for which we receive no tax benefit, resulting in a negative effective tax rate for the nine months ended September 30, 2026. Certain non-deductible administrative fines discussed in Note 10 — "Commitments and Contingencies" also negatively impacted our tax provision for income taxes and effective tax rate for the nine months ended September 30, 2026. The realization of our deferred tax assets primarily depends on the generation of future taxable income. Based on our current assessment, it is possible that our future results of operations in the U.S. could result in the need to record an additional valuation allowance against our U.S. deferred tax assets within the next twelve months. We continue to monitor the realizability of our deferred tax assets on a quarterly basis and will adjust the valuation allowance in the period where evidence indicates that it is more likely than not that these assets will not be realized. In June 2026, the NTS completed an audit of the income tax and value added tax filings of certain of our Korean operating subsidiaries with respect to the 2021 to 2025 tax years and issued formal assessments of the tax audit results. The assessments primarily focused on transfer pricing and transactions between our Korean subsidiaries, Coupang Corp. and CFS. While we file a consolidated corporate income tax return in Korea, the assessments propose disallowing income tax deductions for services provided by CFS to Coupang Corp. and other tax adjustments. In the assessments, the NTS was seeking an additional tax payment, including penalties and interest, of approximately $208 million. We disagree with the proposed adjustments and intend to vigorously defend our positions through available administrative remedies and, if necessary, judicial proceedings. We concluded, based on the technical and legal merits of our tax positions, that it is more likely than not our tax positions will ultimately be sustained on appeal. Based on the information currently available, we do not anticipate a significant increase or decrease to our income tax contingencies for the issues described in the formal assessments within the next twelve months. Certain amounts assessed by the NTS became payable during the appeals process, and during the third quarter of 2026, we made a cash payment associated with the assessment, net of related refunds received, of $102 million. The net amount paid would be refunded in full, or in part, if our tax positions are ultimately sustained. The payment made is recorded in “Long-term lease deposits and other” on the condensed consolidated balance sheets as of September 30, 2026 and did not affect our condensed consolidated statements of operations. The remaining amounts assessed are not due during the appeals process. As of September 30, 2026, we believe our allowances for income tax contingencies are adequate. We believe that adequate amounts have been reserved in accordance with ASC 740 for any adjustments to the provision for income taxes or other tax items that may ultimately result from these audits. When performing our evaluation, we consulted with outside advisors, and we reviewed and considered relevant laws, rules, and regulations, including, but not limited to, relevant case law. We also considered our intention to vigorously defend our positions and assert our various well-founded legal claims through every available avenue of appeal.
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