Cream together butter, sugar, and vanilla paste in the bowl of a stand mixer.
In another bowl, whisk together flour, baking powder, baking soda and salt.
All flour mixture to butter mixture. Add milk and mix until dough has formed. Divide the dough into two disks. Wrap in plastic wrap and chill in the fridge for 30 minutes or freeze for 15 minutes.
Preheat oven to 350° F. Prepare parchment lined sheet trays.
Roll out chilled dough to 1/4 inch thick. Cut out circles using a floured 2 1/2 inch cutter. Punch out an inner with a smaller cutter of your choice. Lay the cookie cutouts on the parchment lined sheet trays and bake for 12-15 minutes until firm and lightly golden. Let rest on sheet tray until cool to the touch and then transfer to cooling racks.
Preheat oven to 325° F. Line sheet tray with parchment paper.
Spread coconut into a thin and even layer on prepared sheet tray. Bake for 10 minutes. Rotate pan and stir coconut. Continue to bake at 5 minute intervals, rotating the pan and stirring the coconut until golden in color. Once toasted, let cool to room temperature.
In a medium sauce pan, add sugar. Cook over medium high heat until sugar begins to melt. Once sugar begins in liquefy, reduce heat to medium or medium-low. Do not over agitate the sugar, but swirl the pan once in a while to make sure sugar melts evenly. Continue to melt the sugar until liquid is amber brown and aromatic.
Add butter to sauce pan. Whisk until all the butter has melted.
Remove sauce pan from heat and slowly add the heavy cream. Continue to whisk until cream and sugar mixture are homogeneous. Be careful, once you add the cream, the sugar mixture will bubble and rise quite a bit. Be sure the sauce pan is away from heat before you add the cream.
Continue to whisk until caramel is thick and smooth. Let cool until slightly warm to the touch. Reserve about 1/4-1/3 cup of the caramel in a separate bowl. Then add the salt and toasted coconut. Fold into the coconut until thoroughly distributed.
Slowly melt chocolate in the microwave. Place chocolate in a microwave safe bowl and heat for 45 seconds on full power. Stir chocolate and continue to heat at 30 second intervals at half power until chocolate is melted. Make sure not to overheat the chocolate which will bring it out of temper.
Once shortbread cookies are cool, dip one side into reserved caramel sauce. Then spread about 1-1 1/2 teaspoons of coconut caramel mixture on top of cookie. Dipping the cookie first into the reserved caramel sauce helps the coconut mixture to adhere to the cookie. Let cool on rack.
Dip the bottoms of the cookies into the melted chocolate. Let cool on rack upside down (coconut mixture side down) until chocolate has hardened and set.
Once chocolate is set, turn cookie right side up. Transfer remaining dipping chocolate into a small parchment bag or piping bag. Cut a small tip and drizzle chocolate over the tops of the cookies. Let cookies sit out until drizzled chocolate has set and then enjoy!
Keep cookies in an airtight container for up to three days.