Renting your apartment on Airbnb in Nepal: the tax rules nobody has actually written

A cousin turned her late father's flat in Sanepa into a two-bedroom listing last year. Bookings came steadily, mostly NGO staff and long-layover tourists, and the extra income covered more than half her EMI. When I asked how she was handling the tax side of it, she paused. Nobody had ever told her, one way or another, whether what she was doing needed a license, a different tax treatment than an ordinary tenant, or nothing different at all.

That pause is the honest state of Nepali law on this. Not "here are the rules," but "here's what exists, and here's exactly where it stops answering the question."

The homestay law exists, and it doesn't fit your apartment

Nepal does regulate short-stay accommodation, just not the kind you're probably picturing. The Homestay Operating Procedure, 2067 (2010), issued under the Tourism Act by the Ministry of Culture, Tourism and Civil Aviation, requires the host to actually live on the premises, serve meals, and register through a Local Homestay Management Committee. Community homestays additionally need a cluster of five or more participating houses, usually in a rural or tourist-trail setting. Industry commentary is blunt about the mismatch: a homestay is "host present, meal oriented, and community anchored," while an Airbnb-style listing is typically "host-absent and transaction-only," per Nepal Homestays.

In plain terms: the one Nepali law built for short-stay hosting was written for a completely different arrangement than renting out an empty city flat while you live elsewhere. Nothing fills that gap.

That absence isn't lost on the industry that competes with it. Hotel Association Nepal's own president, Shreejana Rana, has said it directly: "All the hotels are required to register before operation, but Airbnb properties in Nepal are neither registered nor are they paying tax to the government... though services like Airbnb are affecting our business, the concerned government office is not doing anything about it," reported by myRepublica. A separate industry group has since lobbied to bring homestay-style services under the income-tax net formally, per the Himalayan Times, but that's an advocacy ask, not an enacted change.

One lawyer's counter-argument is worth knowing, even though it isn't settled either. Advocate Shikhar Pandit has argued that any hospitality-type business, homestay or otherwise, should register with the relevant local authority under general Industrial Enterprise Act logic, per Business 360 Nepal. That's a reasonable legal position, but it's one practitioner's reading by analogy, not a court ruling or an IRD circular naming Airbnb.

The tax question nobody has actually answered

Nepal's Income Tax Act 2058 treats rental income as "investment income" by default under Section 9, taxed differently from business income under Section 7. Crucially, the Act contains no day-count or occupancy-frequency test, the kind some countries use to decide when a rental crosses into being a "trade," that would settle whether nightly Airbnb hosting counts as ordinary rent or as running a hospitality business. Neither an IRD circular nor Nepali CA-firm commentary directly classifying Airbnb income either way turned up anywhere in researching this piece. This is a genuine gap in the law, not an oversight in the research.

The one thing that is settled: ordinary long-term rent from an individual landlord to another individual is exempt from the federal 10% TDS under Section 88, with the municipal house-rent tax (ghar bahal kar, 10% in Kathmandu) applying instead, as the house rent income tax post covers in full. Whether that same framework, built for a year-long tenancy, cleanly extends to a nightly paid stay booked through an app is exactly the part nobody has ruled on.

VAT carries the identical uncertainty. Nepal's VAT law exempts the "purchase, sale, and rental of land and residential buildings," language written for conventional tenancy, not nightly hospitality-style service. Nepal's current VAT/digital-service registration threshold sits at Rs 30 lakh in annual turnover for services. No source found anywhere states whether Airbnb-style hosting income counts toward that threshold, or whether the residential-rent exemption shields it. If your hosting income is meaningful and you're already running other services near that threshold, this is a specific question worth putting to a Nepali tax advisor directly, not assuming your way past.

What Airbnb itself does, and doesn't do, about Nepali tax

Airbnb is explicit that it only collects and remits local tax on a host's behalf in a defined list of countries. Its own help page names roughly 20 jurisdictions, from Australia to Mexico, plus all US states. Nepal is not on that list. Whatever you owe, Airbnb isn't calculating or paying any part of it for you.

There's a structural argument that Airbnb itself should owe something to Nepal, separate from what hosts owe. Nepal's Digital Service Tax runs at 2% on non-resident digital platforms' transaction value with Nepali consumers, with the registration threshold raised to Rs 30 lakh under the Finance Act 2081, and the VAT Act's own definition of a taxable "digital service" was amended to explicitly include "online marketplace services," per Baker Tilly Nepal's current Tax Fact publication. That wording structurally captures a booking marketplace like Airbnb. But the list of companies actually confirmed paying Nepal's DST, Google, Meta, Microsoft, Amazon, Netflix, TikTok, and a handful of others, reported by myRepublica, does not include Airbnb, Uber, or Booking.com. Whether Airbnb has registered at all is undocumented either way.

The guest-registration question that nobody has answered either

Hotels and guesthouses in Nepal must report foreign guests to authorities monthly under the Immigration Act 2049 and Immigration Rules, and Nepal has begun rolling out a digital Foreign Nationals Management Information System to formalize this, per the Kathmandu Post. Every source describing that rollout frames it around star-rated hotels in Kathmandu Valley first, with "guesthouses and other service-providing institutions" mentioned only as a distant, vaguely dated future phase; as of late 2025 only about 20 hotels had actually integrated with the system.

An informal, peer-to-peer Airbnb host hosting a foreign guest is not named anywhere in this framework, not included, not excluded. If you're hosting foreign nationals regularly, that's worth flagging as an open compliance question rather than assuming the police-reporting requirement definitely doesn't reach you.

How big this actually is in Nepal

This isn't a fringe activity. Nepali reporting cites over 300 homestays and apartments listed on Airbnb across Kathmandu, Bhaktapur, Lalitpur, and Pokhara, with nightly rates from $10 to $100 and hosts earning roughly Rs 50,000 to 80,000 a month in peak season on a 5% Airbnb commission. Third-party short-term-rental data platforms separately estimate several hundred active Kathmandu listings and roughly 250 in Pokhara, both growing at a reported 20 to 35% a year.

Set against that growth, enforcement appears close to absent. One such platform, AirROI, rates Kathmandu's short-term-rental regulation as "low," reporting close to zero percent of listings showing any registration evidence. That absence of enforcement doesn't make an activity legal or tax-exempt; it just means nobody has been made to test the question yet.

The conservative position, since the honest one is uncertainty

Given all of the above, the safest approach for a Kathmandu host isn't waiting for clarity that may not arrive soon.

1. Declare the income. Treat it as taxable, file it, and keep it out of the "nobody will ever know" category. If Nepal eventually rules that hosting income is business income rather than rent, having already declared and paid something is a far better position than having declared nothing.
2. Keep clean records of every booking and payout, since you'd need them either way if the tax treatment gets clarified later, or if a municipality starts asking questions the way KMC has already done for hostels under its 2080 standards.
3. Get payouts through a proper banking channel, not an informal one. All foreign-currency inflows to Nepal are legally required to move through NRB-licensed channels; using anything else risks a separate foreign-exchange problem layered on top of the tax uncertainty.
4. Ask a Nepali tax advisor the VAT-threshold question directly if your hosting income is significant, rather than assuming the residential-rent exemption definitely covers you.

What you actually need to know

• No Nepali law is written for Airbnb-style hosting. The homestay rules don't fit an absentee city apartment, and no IRD guidance classifies the income as rent or business.
• Airbnb collects no Nepal tax for you. Unlike roughly 20 other countries, your obligation here is entirely self-managed.
• Enforcement is close to nonexistent today, but that's a description of the present, not a legal exemption. Declare the income and keep records regardless.

Hosting on Airbnb and want a second opinion on how you're tracking the income? Email parjanya57@gmail.com.

This post is part of the Nepal Money Basics guide — the big-ticket-decisions section.