Why Delaware, Home to Coupang's Headquarters, Became a Corporate Haven [News Seolcham]

Twice as Many Corporations as People
Attractive Tax Benefits for Corporate Activities
Specialized Court of Chancery for Corporate Disputes

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Delaware, where Coupang's headquarters is located, is known as a key hub for corporate incorporation due to its business-friendly regulatory environment and its specialized Court of Chancery, which handles corporate disputes. Leading Korean conglomerates such as Naver, Hyundai Motor, and Lotte Biologics also have U.S. subsidiaries incorporated in Delaware. In fact, Delaware is home to millions of global corporations.

A Corporate Haven with Twice as Many Companies as People

"Two million registered corporations, with 67.6% of the Fortune Global 500 companies incorporated here."

This is the corporate status posted on the official website of the Delaware state government. Delaware is often called a corporate haven in the United States, as the number of corporations is twice the total population (1.05 million as of 2024).

Commercial complex in Wilmington, Delaware. Official website of Wilmington

Incorporating in Delaware offers cost-saving advantages under U.S. tax law compared to other regions. According to the Tax Foundation, a U.S. tax research institute, Delaware's corporate tax rate is 8.7% as of this year. While this is higher than some states like Florida (5.5%) and Georgia (5.39%), the state imposes zero (0) sales tax. There is also no tax on revenue generated outside the state. For companies operating across multiple regions in the U.S. or internationally, incorporating in Delaware is advantageous from a tax perspective.

For this reason, many American global companies establish their corporations in Delaware to save on taxes. Korean companies do the same. When Naver acquired the U.S. company Poshmark in 2022, it established a special purpose company (SPC) in Delaware, allowing it to save on taxes. Although Poshmark, an online secondhand trading platform, is primarily based in California, its registered corporate address is in Delaware.

Another advantage of Delaware is its unique Court of Chancery, the only one of its kind in the United States. The history of the Delaware Court of Chancery dates back to 1792, shortly after the American Revolution.

Equity courts established throughout the state of Delaware. Official website of the state of Delaware

The Court of Chancery was originally established to provide civil remedies that regular courts could not offer, but it has since evolved into an institution specializing in corporate law cases. ▲ It is known for its predictability, as professional judges (not juries) preside over cases; ▲ it provides practical remedies for monetary damages; and ▲ it specializes in complex issues such as directors' fiduciary duties and corporate mergers and acquisitions (M&A).

On this, the Delaware state government emphasizes, "Our goal is not to have a judicial system that favors corporations or shareholders, but to provide a system optimized for executives, investors, and ethically profit-driven companies," adding, "Delaware judges are fair and not involved in any particular interests."

Attracting Corporations to Maintain Infrastructure with Corporate and Franchise Taxes

Corporations can save costs and benefit from operational convenience by incorporating in Delaware, while the state government makes attracting companies a core revenue source through the taxes it collects. Delaware corporate law imposes a 'franchise tax' in addition to corporate tax. This tax ranges from a minimum of $175 to a maximum of $250,000, depending on the nature and size of the corporation, and is paid in exchange for Delaware's superior corporate services.

According to revenue projections released by the Delaware state legislature in May, approximately $1.8 billion in franchise taxes are expected to be collected by next year. This is the second-largest source of state revenue after personal income tax (about $2.5 billion), accounting for 26% of the state's total revenue (about $6.8 billion). Delaware uses the franchise and corporate taxes paid by companies to maintain public services and various infrastructure.