Palantir Tax Payments Questioned After £2m UK Corporation Tax

Published: 5 August 2026
The English Chronicle Desk. The English Chronicle Online

US technology company Palantir paid just £2.1m in UK corporation tax in 2024 despite securing hundreds of millions of pounds worth of public sector contracts, according to a new report examining the company’s global tax arrangements.

The artificial intelligence and data analytics firm, which has become a major supplier to the NHS and the Ministry of Defence, has experienced rapid growth in recent years as governments increasingly rely on AI-powered systems for healthcare, defence and public administration.

However, researchers have raised questions over how much tax the company contributes compared with the scale of its operations and profits.

A report by the Centre for International Corporate Tax Accountability and Research (Cictar) found that Palantir’s effective global tax rate was just 1.4%, significantly below the headline corporate tax rates in many countries where it operates.

The findings have renewed debate over whether multinational technology companies are paying a fair share of tax in the countries where they generate revenue.

Palantir’s growth has accelerated sharply, with chief executive Alex Karp recently describing the company’s financial performance as “otherworldly” after forecasting worldwide revenues would almost double to $8bn (£5.95bn) this year.

The company’s shares rose by 17% in early trading following the announcement, reflecting strong investor confidence in its future growth.

Despite its expanding presence in the UK, where it has become one of the government’s most important technology suppliers, the amount of corporation tax paid locally remains relatively small compared with its revenues.

The UK represents Palantir’s largest market outside the United States. The company reported £247m in UK revenues in 2024, while around 750 of its non-US employees are based in Britain.

The firm also holds major government contracts, with estimates suggesting it has around £670m worth of public sector agreements in the UK.

Among its largest deals is a three-year £240m Ministry of Defence contract awarded in 2025 to support defence data systems. The agreement was granted without a competitive tender, attracting scrutiny from campaigners and opposition figures.

According to the Cictar report, Palantir declared profits exceeding £25m in the UK during 2024 but paid only £2.1m in corporation tax, resulting in an effective tax rate of just over 8%.

The UK corporation tax rate during that period was 25%.

Researchers said one possible explanation was the company’s use of international accounting structures, including transfer pricing arrangements that allocate revenue and profits between different parts of the business.

The report claimed Palantir appears to record a significant portion of its international revenue through its US parent company rather than local subsidiaries.

Researchers said that while 26% of Palantir’s overall revenue comes from customers outside America, only around 4% of revenue is recorded outside the US.

They argued this could allow profits generated from overseas contracts to be shifted into the company’s US operations.

The researchers highlighted differences between Palantir’s UK company filings and its stock market disclosures. The company reported £159m in revenue through its UK subsidiary, while separate financial statements showed £247m in UK-related revenue.

Palantir rejected suggestions that its tax arrangements were inappropriate.

A company spokesperson said Palantir complies with tax rules in every country where it operates and described criticism of its transfer pricing arrangements as “simply not credible”.

The company said transfer pricing is a standard practice used by multinational corporations worldwide to allocate profits between different parts of a business.

It explained that US parent companies often record revenue from international customers because they own the technology products being sold, while local subsidiaries provide services and operational support.

The company also defended another tax strategy involving employee share options.

Palantir allows employees to receive shares rather than traditional cash-based compensation, which can reduce corporation tax obligations because companies are allowed to deduct certain share-based expenses.

Critics argue this approach shifts part of the tax burden from companies to employees, who may pay income tax on their share awards.

Palantir said the system was a legitimate and widely used incentive scheme designed to give workers a stake in company success.

The firm argued that employees paying income tax on shares can actually result in more tax being collected because income tax rates are higher than corporation tax rates.

In the United States, Palantir has accumulated billions of dollars in tax credits linked to previous losses and employee share programmes.

The Cictar report suggested that, based on current profitability, the company may not need to pay significant US federal income taxes for years because of these accumulated benefits.

The company has also benefited from broader changes to corporate taxation in the US, including tax reductions introduced during Donald Trump’s first presidency.

Campaigners argue that multinational technology companies should contribute more to the public finances of countries where they win government contracts.

Andrea Egan, general secretary of the trade union Unison, which commissioned the report, criticised what she described as large corporations avoiding their responsibilities.

She said companies making billions from public sector contracts should contribute properly to the services they benefit from.

“Tech giants raking off billions in profit shouldn’t be free to pay what they please,” she said.

Unison also questioned whether governments should award major public service contracts to companies that contribute relatively little in corporation tax.

However, Palantir highlighted the wider contribution it makes through employment taxes.

The company said it paid $148m in UK employment taxes during the previous year, including employer national insurance contributions and income tax payments connected to staff compensation.

Supporters of multinational technology firms argue that tax systems must recognise the complexity of global businesses and avoid penalising companies that operate internationally.

They say structures such as transfer pricing are not unique to Palantir but are commonly used by major corporations across industries.

The debate reflects a wider global discussion about whether existing tax rules are suitable for modern technology companies whose products and services can operate across borders with limited physical infrastructure.

As AI becomes increasingly central to government services, defence operations and business decision-making, companies such as Palantir are likely to face growing scrutiny over both their influence and financial responsibilities.

For governments, the challenge is balancing access to advanced technology with ensuring that companies benefiting from public contracts contribute fairly to the societies where they operate.

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