Preheat oven to 350°F (175°C). Grease and line three 8-inch cake pans with parchment paper.
Whisk dry ingredients: In a bowl, mix flour, baking powder, and salt. Set aside.
Cream butter & sugar: Beat butter and sugar until light and fluffy (~3 mins).
Add eggs & extracts: Beat in eggs one at a time, then add vanilla and coconut extracts.
Alternate dry & wet ingredients: Mix in flour mixture and coconut milk in batches, starting and ending with flour.
Bake: Divide batter into pans and bake for 30-35 mins, or until a toothpick comes out clean. Cool completely.
Beat butter until smooth. Gradually add powdered sugar, coconut milk, and extracts until fluffy (~4 mins).
Layer cakes with frosting between each. Cover the entire cake with frosting.
Press toasted coconut onto the sides and top.