US citizenship renounced days before
Facebook's IPO. Will he become a Singapore citizen?
Facebook
Inc co-founder Eduardo Saverin has renounced his US citizenship, according to
an Internal Revenue Service report, days before the company's initial public
offering.
The news,
first published by Bloomberg on Friday, was based on an IRS notice late in
April that named people "who have chosen to expatriate."
Facebook
plans to raise as much as US$10.6 billion in an IPO that is expected to value
the company at as much as US$96 billion.
The
offering could leave Saverin, who once owned 5 per cent of the company, with a
hefty capital-gains tax bill.
Saverin
has sold enough of his Facebook stake that he does not appear in IPO filing
documents that list shareholders who own 5 per cent or more of the company,
though his holdings are still believed to be substantial.
"Eduardo
recently found it more practical to become a resident of Singapore since he
plans to live there for an indefinite period of time," Saverin's spokesman
told the US paper.
His
decision to leave US is independent of the upcoming IPO and the potential tax
liability, the spokesman said.
According
to a report from The Los Angeles Times, tax experts say it is a "shrewd
tax move" that will save him billions.
Which
means his stake could amount to about $4 billion after the IPO, the report
said.
To put
it in perspective, Mark Zuckerberg, Facebook's founder, stands to receive a tax
bill of more than US$1 billion when the social networking website makes its
IPO.
ISLAND
NATION
Saverin
now lives in Singapore, an Asian city-state that has no capital-gains tax.
There is a minimum 15 per cent rate for long-term capital gains in the United
States for people in higher-income brackets.
Saverin
might pay as much as US$150 million in exit taxes but it will be less than the
taxes he would owe if he stay as a US citizen.
Saverin,
who was born in Brazil, was educated in the United States at Harvard, where he
co-founded Facebook with Mark Zuckerberg and others.
The
Facebook co-founder stands at No. 634 on the Forbes list of billionaires with
an estimated wealth of US$2 billion.
The
30-year-old Brazilian has spent the last four years living in Singapore. In
1992, he moved to the United States and became a US citizen in 1998.
The question
of American citizenship became a bit of a talking point this week as former
Republican Presidential candidate Michele Bachmann revealed she had become a
dual US.-Swiss citizen, then sought to return her new Swiss passport.
Renouncing
citizenship is a complicated and lengthy affair involving a signed oath and an
appearance before a U.S. diplomatic official, according to the US State
Department's website.
Giving
up citizenship is an irrevocable act, according to the State Department.
According
to the Internal Revenue Service report, those who gave up citizenship last
quarter included Philip Radziwill, nephew of Jackie Onassis, the wife of
assassinated former President John F. Kennedy.
The
report added that Saverin is at least the second billionaire to give up his US
passport in the last 20 years.
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