Eduardo Saverin renounces US citizenship before Facebook IPO

With Facebook’s IPO just round the corner, it is bringing more good for everyone than one could’ve imagined. One of Facebook’s co-founders have figured out a way to evade taxes when the social network goes public later this month.

As published by Bloomberg, Eduardo Saverin is alongside several Americans who have decided to relinquish their claim of being American citizens. His spokesman elaborated that Brazillian born Saverin, currently residing in Singapore, made up his mind about this around September. He plans to acquire Singaporean citizenship, as neither capital gains nor income from particular investments is considered taxable in Singapore.

In anticipation of Facebook going public towards the end of this month, individual shares of the company are being valued within the range of $28-$35. Estimation from these values raise the net value of the company to almost a hundred billion dollars.

It will be unfair to consider Saverin as the first rich American to forego his citizenship in order to avoid taxes. Another Bloomberg report reveals that this trend has multiplied seven times among rich Americans since a clampdown on tax avoiders by IRS was announced earlier this year. For instance, as Forbes reported, the prospective owner of Campell’s Soup, John Dorrance III, not only let go of his right of being an American citizen but also sold his stake before shifting to Ireland.

Lily Safra’s story in Brazil tells us that this phenomenon is not exclusive to U.S. only. She shifted to Monaco.

The conclusion of a study by European economists affirms that a suppression of global tax avoiders has not been successful in curbing the problem of tax evasion. Stats from banks showed that the amount held in tax evasion last year was equal to that in 2007. Several international treaties were then signed to stop this, but those treaties proved counter-productive, as rather than stopping the problem of tax evasion, they encouraged evaders to act quickly in shifting their assets to tax-lenient places.