The HCM City tax department said it has served a tax notice and slapped a fine on an individual together amounting to VND4.1 billion (US$178,000) for failure to pay tax on incomes received from foreign companies in the last two years.

It said the person, whose gender or name it did not reveal, had received over VND41 billion ($1.78 million) from Google, Facebook and Youtube.

This is the first person ever in the country to pay tax on online income from abroad.

Authorities know of many other individuals and businesses getting incomes from Google, Facebook and others without filing tax returns.

“We asked four banks to review all money transactions and discovered huge amounts of money were received from Google, Facebook, Youtube without paying tax,” Nguyen Nam Binh, deputy head of the Department of Tax, was quoted as saying by Tuoi Tre (Youth) newspaper.

The tax department questioned the person about the VND4.1 billion back taxes who claimed to have forgotten to pay tax.

Binh revealed that another person with temporary residence in HCM City earned VND20-30 billion ($870,000 - 1.3 million) from Google, Facebook and Youtube, but moved out of his temporary address when tax officials tried to contact him.

“We have asked the tax department of Quang Nam Province, where he is registered as a permanent resident, to pursue the matter.”

The HCM City tax department said the number of people around the country earning large incomes from Google, Facebook and Youtube needs to be checked, and it would urge all banks and financial institutions to co-operate.

“We would like to inform all individuals and organisations who receive money from abroad but have not registered with tax authorities to do so immediately,” Binh said.

“The tax department has suggested creating a co-ordination mechanism between it and banks to monitor incomes, especially from non-traditional resources like creating apps and games and video clips on social network and the internet.”

Tax collection from people selling products on Facebook had made little progress either, he said.

He said the department had called on sellers on Facebook to discuss tax payments with it but the number of people who had done so was very small.

Tran Xoa, a lawyer and director of the Minh Dang Quang Legal Company, criticised banks for failing to report unusual money transactions.

“The State Bank of Viet Nam has a regulation that banks are responsible for reporting unusual actions, but money transfers by Google, Facebook, Youtube to individuals and organisations have been happening for a long time and we should reconsider the system.”

He also suggested that tax authorities should improve oversight of trans-border transactions and tax education of the public.

By checking with just four banks, the tax authorities discovered that Google, Facebook and Youtube have paid over VND500 billion ($21.75 million) to individuals and organisations, with the amounts ranging from tens of millions to several billion dong.

Everyone who received over VND100 million ($4,350) in a financial year have to pay 5 per cent valued added tax and 2 per income tax.

The department vowed to also collect taxes from organisations receiving incomes from Google, Facebook and Youtube. — VNS