The software group Palantir paid just £2M in corporation tax in the UK in 2024

Palantir paid just £2.1 million in UK corporation tax on £25 million of profits in 2024, an effective rate of 8% against the statutory 25%. The company achieved this through two mechanisms: transfer pricing, which shifts revenue from UK contracts to its US parent, and share options granted to employees, which reduce taxable profit. Researchers found that while 26% of Palantir's revenue comes from outside the US, only 4% is booked abroad, indicating a systematic allocation of profits to the US.

The UK is Palantir's largest market outside the US, with £247 million in revenues and about 750 employees. Despite this, the company holds an estimated £670 million in government contracts, including a £240 million Ministry of Defence deal awarded without competitive tender. The discrepancy between revenue declared in UK filings (£159 million) and that reported to US markets (£247 million) suggests that contracts are signed with US entities, which then pay local subsidiaries a service fee.

Globally, Palantir's effective tax rate is just 1.4%, and it paid no US federal tax in the most recent year. The company's CEO forecast worldwide revenues nearly doubling to $8 billion, and shares rose 17% on the news. The report, commissioned by the Unison trade union, argues that such tax practices allow tech giants to avoid contributing fairly to public services they help run.

Palantir defended its practices, stating that transfer pricing is standard for multinationals and that it complies with all tax regimes. A spokesperson noted that accounting differences can lead to varying filings across countries. However, the union's general secretary called for change, saying systems that enable tax avoidance on an industrial scale must be reformed.

For engineers, this event highlights the tension between a company's rapid growth and its tax contributions, especially when those contracts involve public services like the NHS and Ministry of Defence. While no immediate policy changes are announced, the report may fuel debate about tax transparency requirements for government contractors. Engineers working on such projects could face increased scrutiny of their employer's financial practices.