Preheat the oven to 350 degrees F (180 degrees C). Add cupcake liners to a muffin pan.
In the bowl of a stand mixer fitted with the paddle attachment, combine the flour, sugar, baking powder, and salt.
Cut up the butter into small cubes and add to the dry ingredients. Mix on low speed until it resembles wet sand.
Add the oil, coconut milk, vanilla, and coconut flavor paste, and mix until just combined.
In a separate bowl, whip the egg whites to medium peaks. Gently fold them into the batter with a rubber spatula until just combined.
Fill the cupcake liners about ⅔ of the way full.
Bake for 16-18 minutes or until a toothpick inserted comes out clean.
Cool completely before decorating.
For the coconut cream cheese frosting:
In the bowl of a stand mixer fitted with a paddle attachment, beat the butter, cream cheese, and coconut flavor paste on high speed until smooth.
Slowly add the sifted powdered sugar and mix on low speed until fully combined.
Once all of the powdered sugar is added, continue beating on low speed until no more lumps or pockets of air remain and the frosting is smooth.
Decorate the cupcakes and top each with coconut flakes as desired.
Notes
Do not over-whip the egg whites. Whip the egg whites only to medium peaks. As you can see above, the peaks droop slightly - this is what you're looking for. Whipping them to stiff peaks will make the egg whites too dry, causing them to deflate as they're folded into the batter.
Fill the cupcake liners ⅔ full. Over-filling the cupcakes can cause them to sink even though they're baked all the way through.
Use cold cream cheese & room temperature butter. In order to create a sturdy, pipeable cream cheese frosting, pay close attention to the temperature of the ingredients. Cold cream cheese will ensure it's thick enough, while room temperature butter will ensure all of the ingredients cream together properly.
Sift the powdered sugar. I know it can be a pain, but trust me, sifting your powdered sugar before adding it to the frosting is so worth it! If you don't sift it, you'll need to mix the frosting on low speed for a long time to smooth it out. This also runs the risk of agitating the milk solids, creating a grainy frosting.