The short version
- Palantir paid approximately £2 million in UK corporation tax in 2024 while declaring over £25 million in profits, resulting an effective rate significantly below the statutory standard.
- A new report attributes the low contribution to transfer pricing mechanisms that shift revenue recognition to the United States and the use of share-based compensation to offset liabilities.
- Union leaders argue that firms receiving substantial public funding should contribute more equitably, while Palantir maintains its practices are standard for multinational corporations.
The software company Palantir Technologies paid just £2 million in corporation tax in the United Kingdom during 2024, a figure that has drawn sharp criticism from labor representatives and policy researchers. This payment occurred despite the firm securing public sector contracts worth hundreds of millions of pounds, including significant deals with the National Health Service and the Ministry of Defence. The disparity between the company’s revenue generation and its tax contribution has intensified scrutiny regarding how multinational technology firms structure their financial obligations in foreign markets.
According to a report released by the Centre for International Corporate Tax Accountability and Research, Palantir’s global effective tax rate stands at approximately 1.4 percent. In the United States, the company paid no federal income tax last year, relying instead on accumulated tax credits and carried-forward losses. These financial mechanisms are projected to shield the firm from federal tax liabilities for nearly a decade under current profit trajectories. The report highlights how strategic accounting practices allow large technology companies to minimize their contributions to government coffers across multiple jurisdictions.
In the UK specifically, Palantir declared profits exceeding £25 million in 2024, yet its corporation tax payment of roughly £2.1 million resulted in an effective rate of just over 8 percent. This stands in stark contrast to the statutory corporation tax rate of 25 percent applicable that year. Researchers noted that despite the UK being Palantir’s largest market outside the United States, with £247 million in declared revenues, the tax collected there was lower than amounts paid in countries such as South Korea, Japan, France, and Germany. The company employs approximately 750 people in Britain, forming the majority of its non-US workforce.
Analysts point to transfer pricing as a primary driver of this discrepancy. This practice involves allocating profits among different entities within a corporate group to take advantage of varying tax regimes. In Palantir’s case, revenues generated from European contracts appear to be shifted to the US parent company, which benefits from substantial tax shelters established there. Although 26 percent of the company’s total revenue originates from customers outside the United States, only 4 percent is officially booked abroad. Contracts are often signed with US-based entities, which then pay service fees to local subsidiaries for delivering work.
Discrepancies in financial filings further illustrate these accounting methods. Palantir disclosed £159 million in revenues in its UK company filings for 2024, but reported £247 million in UK revenues in its stock market disclosures. This difference suggests that while the economic activity occurs in the UK, the revenue recognition is managed through US structures. A spokesperson for Palantir defended these practices, stating that transfer pricing is a universal standard for large multinational corporations and that criticisms of their use are not credible. The company emphasized that it complies with all tax regimes in the jurisdictions where it operates.
Another significant factor reducing Palantir’s tax bill is its extensive use of share options as employee compensation. When these shares vest, the company can deduct their value from its taxable income, effectively shifting the tax burden to employees who pay income tax on the gains. In the UK, this mechanism allows the firm to offset corporation tax liabilities with what it describes as a standard measure designed to give staff a stake in the business. Palantir argues that because income tax rates are often higher than corporation tax rates, this approach ultimately results in more total tax being paid.
The political and social implications of these financial strategies have become a focal point for labor unions. Andrea Egan, general secretary of Unison, which commissioned the report, argued that systems enabling industrial-scale tax avoidance must be reformed. She contended that ministers should not award contracts to run public services to firms that fail to contribute adequately to public finances. The union boss emphasized that tech giants generating billions in profit should not have the freedom to pay minimal taxes while benefiting from state-funded opportunities.
Palantir’s financial growth has been rapid, with shares rising significantly after CEO Alex Karp forecast worldwide revenues would nearly double to $8 billion this year. The company holds an estimated £670 million in government contracts as of 2026, including a recent three-year, £240 million deal with the Ministry of Defence awarded without competitive tender. As the firm continues to expand its footprint in public sector AI and data analytics, the debate over its fiscal responsibility is likely to persist. The intersection of lucrative government partnerships and minimal tax contributions remains a contentious issue for policymakers and taxpayers alike.
The broader context includes recent changes in US tax policy that have benefited corporations like Palantir. Tax cuts implemented during Donald Trump’s presidency reduced the corporate rate from 35 percent to 21 percent, providing additional relief. However, negotiations regarding international minimum tax agreements remain ongoing, with potential carve-outs affecting how much these firms must contribute globally. Until such regulations are fully enforced or reformed, companies may continue to utilize existing loopholes and accounting strategies to minimize their tax burdens in high-tax jurisdictions like the UK.
Sources behind this briefing
Go to the original reporting
- The Guardian World↗Palantir paid just £2m corporation tax in UK in 2024 despite lucrative public sector contracts
