The tax strategy behind Palantir's $370bn valuation
Palantir, a leading artificial intelligence company, recently reported second-quarter revenue of $1.94 billion, a 93 percent jump from the same period last year. However, a new report by the Centre for International Corporate Tax Accountability and Research (CICTAR) reveals that the company paid a global corporate tax rate of just 1.4 percent in 2025. This extraordinarily low tax rate is especially striking given the company's growing reliance on public contracts in the UK and Europe. Through a strategy that involves shifting a majority of its profits to its U.S. parent company, Palantir has managed to reduce its tax burden significantly. This has been done by capitalizing on past losses and numerous tax benefits available in the United States.
According to the CICTAR report, Palantir has established a clear and well-documented pattern of moving profits out of the countries where its services are delivered. In the UK, for example, the company has secured over £670 million in government contracts in recent years. Yet, it managed to pay only around £2 million in corporate tax. Such practices have prompted widespread questioning about the ethical responsibilities of a company that benefits so heavily from public funds but pays an extremely small fraction of taxes in return.
How Palantir benefits from U.S. tax policies
Palantir has fully capitalized on the tax reforms enacted during the Trump administration. In 2017, the federal corporate tax rate was slashed from 35 percent to 21 percent, creating an environment where large firms like Palantir could cut their tax bills substantially. Alongside this, the company uses a common tax strategy known as transfer pricing. This allows it to distribute its global profits among its different business entities, further reducing its U.S. tax liability. Although the CICTAR report does not claim these methods are illegal, they have raised serious ethical questions. Many argue that companies receiving vast sums in public contracts should contribute more meaningfully to the societies that support them.
Palantir's controversial contracts and operations
Founded in 2003 by Alex Karp and billionaire Peter Thiel, Palantir was initially backed by In-Q-Tel, a venture capital firm created by the U.S. Central Intelligence Agency to fund emerging technologies for national security. The company quickly established itself as a major player in the fields of data analytics and artificial intelligence. Palantir's tools are now used by U.S. agencies, including the Immigration and Customs Enforcement (ICE) division. Its technology allows these agencies to merge data from multiple sources—such as financial, immigration, and health records—creating a centralized system that raises red flags about algorithmic bias, privacy violations, and the dangers of an unchecked surveillance state.
Palantir has significantly increased its presence in Israel over the years. It opened offices there in 2015 and has since deepened its connections with the Israeli government and military. In January 2024, the company announced a major strategic partnership with the Israeli Ministry of Defence for data analytics and AI. This partnership has led to a surge in investment and expanded operations in the region, particularly following the October 7 attacks. According to Open Intel, a research platform monitoring corporate involvement in Israel's war in Gaza, Palantir has hired individuals with backgrounds in Unit 8200, Israel’s elite cyberintelligence division. Its software, used in intelligence gathering, is said to help in compiling military targeting lists. Karp has publicly defended the company’s role in supporting Israel, despite the growing scrutiny and ethical concerns that come with it.
A spokesperson for Palantir told the Guardian that the company adheres to all applicable tax laws and that transfer pricing is a standard, widely accepted practice among global businesses. Al Jazeera has reached out to Palantir for further comments but has not yet received a response. The company’s market value, currently around $370 billion, reflects its position among the world’s largest publicly listed firms. However, its controversial partnerships and tax strategies continue to attract attention from watchdogs, researchers, and the public.