Facebook's Saverin says...

Facebook's Saverin says he's not dodging taxes

5/16/2012 by Steven Musil  

Facebook co-founder Eduardo Saverin, who is simultaneously becoming one of the richer and more reviled people around, wants to set the record straight.

Saverin, who helped Mark Zuckerberg launch Facebook in 2004, will become an instant billionaire when the social-networking giant goes public in its massive IPO later this week. But Uncle Sam's tax bite is expected to be tempered by the fact that Saverin, a Brazilian who immigrated to the US as a boy to avoid kidnapping plots, has renounced his US citizenship.

The recent revelation has raised the consternation of many, including our ZDNet colleague David Gewirtz, who accuse Saverin of reaping the benefits of US citizenship and then skipping out when it was his turn to give back:

What he's done is played a system and gained tremendously for it. A case could be made that that's fair. One of the first things they teach you in B-school is to pay the least amount of taxes you can within the bounds of the law, and even the IRS accepts this as a reasonable strategy.

But going so far as to renounce the incredible gift of citizenship we gave to this man, and by doing so, saved him from kidnap gangs in his native country--that's below reprehensible.

However, Saverin, who now makes his home in Singapore, which has no capital gains tax, says that his motivation is misunderstood and that tax avoidance had nothing to do with his decision.

"This had nothing to do with taxes," he told The New York Times in an interview published today. "I was born in Brazil, I was an American citizen for about 10 years. I thought of myself as a global citizen."

He professes that he is no tax expert but adroitly points out that he "complied with all the known laws", including the 15 percent US exit tax, which ensures that the wealthy don't avoid paying something before their departure.

Saverin, who holds a degree in economics from Harvard, certainly knows he could have avoided capital gains taxes by borrowing against his shares instead of selling them. However, tax experts suspect his true motivation was to avoid estate taxes, which could take 35 percent or more of his fortune when he dies.

Before news of his citizenship status was revealed, Saverin was known more for living the lifestyle of the rich and famous in Singapore.

"It's a misperception, especially the playboy," he told the Times. "I do have a Bentley. I do go out. I'd rather not go into personal details."

When Facebook goes public on Friday, Saverin's stake is expected to be worth more than US$3 billion.