Why $370bn tech group Palantir pays 1.4 percent tax rate: Report

Palantir Technologies, the United States data analytics and artificial intelligence company which has contracts with the country’s military and intelligence apparatus, has “engineered its corporate structure” to pay no US federal corporate income tax, according to a new report.

The study by the Centre for International Corporate Tax Accountability and Research (CICTAR) comes as Palantir reports soaring revenues, driven partly by government contracts, while it faces continued criticism for providing technology to the Israeli military amid the genocide in Gaza.

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Here’s what we know.

What does the report show?

Earlier this week, Palantir reported second-quarter revenue of $1.94bn, up 93 percent from a year earlier. But despite its rapid growth, CICTAR said its global effective tax rate was just 1.4 percent in 2025.

CICTAR’s report also identifies what it describes as a pattern of profits arising from contracts in the United Kingdom and Europe being shifted to the company’s US parent company, leaving relatively little taxable profit in the locations where the work is carried out.

In the UK, Palantir recorded a corporate tax charge of about two million pounds ($2.7m) in 2024, despite securing more than 670 million pounds ($900m) in government contracts in recent years.

CICTAR claims its investigation shows that Palantir shifts profits to the US, where earlier losses and tax breaks help it pay little or no federal corporate income tax.

Palantir has also benefitted from tax changes introduced under US President Donald Trump, including the reduction of the federal corporate rate from 35 percent to 21 percent in 2017.

The report does not allege that any of the arrangements identified are illegal. But they have raised ethical questions about whether a company receiving billions of dollars in public contracts worldwide should be able to contribute so little in tax.

A spokesperson for Palantir told the UK’s Guardian newspaper that it fully complies with all tax regimes. “Transfer pricing, which allocates a company’s profits among entities within the Palantir group of companies, is an entirely standard practice that is virtually universal for large multinational companies,” the spokesperson said.

Al Jazeera has contacted Palantir for comment about this story, but has not received a response.

What is Palantir?

The company was founded in 2003 by a group that included chief executive Alex Karp and billionaire technology investor Peter Thiel. Palantir initially received backing from In-Q-Tel, a nonprofit venture capital fund created in 1999 by the CIA to support high-tech startups developing technology for US intelligence and national security.

Palantir’s market value was around $370bn during early trading on the Nasdaq stock exchange on Thursday, making it one of the world’s biggest 50 publicly listed companies.

Palantir has faced growing controversy over its work with the Trump administration’s immigration authorities, including providing technology used by the Immigration and Customs Enforcement (ICE) agency. More than 60 people have died in ICE custody or been shot and killed during federal immigration enforcement operations since Donald Trump returned to office

According to the CICTAR report, Palantir technology enables agencies like ICE and the Department of Homeland Security “to merge vast datasets, including financial, immigration, and health records, without adequate transparency or consent, raising alarms over privacy violations, algorithmic bias, and the rise of the surveillance state”.

How is Palantir linked to Israel?

Palantir has said it has a “strategic partnership” with Israel. The company opened offices in Israel in 2015.

The CICTAR report states: “There was a ‘surge’ of investment into Israel in response to increased demand for Palantir software following the October 7 attacks, and a major strategic partnership was signed between Palantir and the Israeli Ministry of Defence in [January] 2024 for data analytics and AI.”

Open Intel, a research platform tracking corporate involvement in Israel’s war on Gaza, has found that Palantir has recruited former members of Unit 8200, the Israeli military’s elite cyberintelligence division.

Open Intel has also reported that Palantir’s software can combine intercepted communications, satellite imagery and other intelligence to help Israeli forces produce military targeting lists.

CEO Karp has defended the company’s support for Israel. “I am the most publicly supportive CEO of Israel,” he told CNBC earlier this year, adding: “I think Israel is on the side of good.”

Palantir has also faced scrutiny over its vision for the future of artificial intelligence.

In The Technological Republic, a book co-written by Karp and Palantir executive Nicholas W Zamiska, the pair argue that Silicon Valley has abandoned its responsibility to develop technology that strengthens Western military power alongside advanced AI capabilities.

Some critics have described the philosophy as a form of “techno-fascism”.

How much tax does Palantir pay in the US?

Palantir paid no US federal corporate income tax in 2025 and just $2.5m in state income taxes, according to the CICTAR report. It was the third consecutive year in which the company paid no federal corporate income tax in the US.

CICTAR says Palantir has built up more than $3.5bn in deferred tax assets through previous losses, research and development credits and deductions linked to shares awarded to employees. In simple terms, these tax benefits can be used to cancel out tax due on future profits.

The report estimates these could shelter Palantir’s next $16.5bn in profits, allowing it to avoid federal corporate income tax for many years.

Palantir has also benefitted from the 2017 corporate rate changes introduced under Trump.

“The current 21% US federal corporate income tax rate (reduced from 35% in 2017 during the first Trump administration) should have seen Palantir incurring a $348 million US federal income tax expense in 2025. However, it paid zero in US federal income tax and only $2.5 million in US state income taxes,” the report states.

How much tax does Palantir pay elsewhere?

Palantir paid less than $21.7m in income taxes globally in 2025, net of refunds, despite recording pretax profits of $1.66bn.

Its global tax expense was only $22.7m, meaning that both the tax it recorded in its accounts and the cash tax it actually paid amounted to little more than 1 percent of its pretax profit.

Outside the US, its largest disclosed cash tax payments were $5.8m in South Korea and $4.8m in Japan. It paid $2.8m in France, $1.7m in Germany and a combined $4.1m across all its other foreign markets.

The UK, Palantir’s largest market outside the US, was not listed among the countries where it made its largest tax payments, despite generating $427m in revenue there in 2025.

In its UK accounts for 2024, Palantir recorded a corporation tax charge of about 2 million pounds ($2.7m).

How does Palantir reduce its tax bill in Europe?

CICTAR says its investigations show that Palantir reduces its European taxes by leaving relatively little taxable profit in the countries where its staff operate and its contracts are delivered.

In 2025, 26 percent of Palantir’s revenue was generated outside the US, but only 4 percent of its pretax profit was recorded overseas. By contrast, 96 percent of its profits were booked in the US, where its accumulated tax benefits meant it paid no federal corporate income tax.

In several European countries, local Palantir subsidiaries operate largely as service providers to the US parent. This leaves them with narrow reported profit margins and correspondingly small tax bills.

Why do Palantir’s government contracts matter?

The CICTAR report states that Palantir’s tax arrangements are particularly significant because much of its rapid growth has been driven by public contracts.

In the US, the company holds multibillion-dollar contracts with government agencies, including the military, intelligence services and immigration authorities. More than half of Palantir’s revenue now comes from government customers, according to the report.

In the UK, Palantir holds at least 670 million pounds ($901m) in government contracts, including a 330 million-pound ($444m) agreement to build the National Health Service (NHS) Federated Data Platform and a 240 million-pound ($323m) Ministry of Defence contract awarded without a competitive tender.

The NHS contract has attracted criticism from health workers and digital rights groups, who have questioned the decision to entrust sensitive patient data to a company that has faced scrutiny over allegations that its technology has been used to aid Israel’s genocide in Gaza.

Although tax avoidance strategies can be legal and the report does not allege that Palantir has broken the law, CICTAR says Palantir “appears to do everything it can to avoid corporate income tax payments – the backbone of national economic security – which pay for the services it seeks to deliver, and many other essential public services”.

Duncan McCann, tech and data lead at the Good Law Project in the UK, told Al Jazeera the findings were “a slap in the face to ordinary taxpayers and local businesses who play by the rules”.

“It is completely unacceptable that multinational tech giants like Palantir are happy to extract huge profits from the UK market while allegedly exploiting accounting loopholes to dodge their corporate responsibilities,” he said.

Meanwhile, the UK Treasury’s own procurement guidance states that public bodies should not “engage in, or connive at, tax evasion, tax avoidance or tax planning” and should be vigilant not to facilitate tax arrangements that are “detrimental or disadvantageous to the Exchequer”.

Amnesty International has called on the UK government to reconsider Palantir’s government contracts. Both the UK government and NHS England should “cease the purchase of equipment and services from the company” until it can demonstrate it is “not contributing to Israel’s genocide, apartheid, unlawful occupation or other crimes under international law”, Amnesty said.

Reporting originally appeared via Al Jazeera. Read the full source for additional context.