Palantir paid just £2m corporation tax in UK in 2024 despite lucrative public sector contracts

Palantir, the US-based technology firm known for its advanced analytics tools, paid just £2 million in corporation tax in the United Kingdom during 2024, despite securing substantial public sector contracts valued in the hundreds of millions of pounds. According to a report by the Centre for International Corporate Tax Accountability and Research (Cictar), the company's effective tax rate in the UK was approximately 8%, significantly lower than the statutory rate of 25%. This low tax contribution contrasts sharply with the company's extensive involvement in UK public services, including contracts with the National Health Service (NHS) and the Ministry of Defence (MoD). The report highlights that Palantir's UK operations generated £247 million in revenues for 2024, making the UK its largest market outside the US. However, the actual tax paid by the company in the UK was far below expectations. The discrepancy appears to stem from the company's use of transfer pricing strategies, which allow it to shift profits from its UK subsidiaries to its US parent company, thereby benefiting from more favorable tax rates. This practice is not uncommon among multinational corporations, though it has drawn criticism from advocacy groups. Palantir's growth trajectory has been impressive, with its shares rising 17% in early trading following a forecast by Chief Executive Officer Alex Karp that global revenues would nearly double to $8 billion in 2024. Karp described this projection as “otherworldly,” underscoring the company's rapid expansion and increasing influence in both private and public sectors. The company's success is largely attributed to its ability to leverage artificial intelligence and data analytics to meet the demands of clients ranging from healthcare providers to defense agencies. The UK is home to about 750 of Palantir's employees, reflecting the company's commitment to maintaining a presence in the region. In addition to its existing contracts, Palantir secured a three-year, £240 million agreement with the MoD in December 2023, which was awarded without a competitive bidding process. This raises questions about the transparency and fairness of procurement procedures in the public sector. According to the Cictar report, Palantir's global effective tax rate was just 1.4%, indicating that the company's overall tax burden remains minimal even as its revenues grow substantially. In the United States, the company paid no federal taxes and just over $2.5 million in state taxes, further illustrating its low tax liability. Researchers noted that Palantir's strategy of shifting revenues and profits from European markets to the US parent company allows it to exploit tax advantages available in the US. Andrea Egan, general secretary of the trade union Unison, which commissioned the report, emphasized the need for systemic changes to ensure that companies contribute fairly to the economies in which they operate. She argued that tech giants should not be allowed to avoid their financial responsibilities, particularly when they benefit from public sector contracts. “Ministers shouldn't award contracts to firms that are starving them of cash,” she stated. A spokesperson for Palantir defended the company's tax practices, stating that it adheres to the legal requirements in each jurisdiction where it operates. The spokesperson criticized the use of transfer pricing as “simply not credible,” asserting that such practices are standard for large multinational enterprises. They explained that differences in accounting methods can lead to variations in reporting across different regions, and that US parent companies often serve as the ultimate beneficiaries of these arrangements.