Proposed legislation, which could become law this week, seeks to restrict the number of days Iceland’s 335,000-strong population can offer Airbnb rentals in their properties to 90 days a year before they must pay business tax.

The island is set to welcome 1.6 million visitors this year, 29% up on last.  And as the building of hotels struggles to keep pace with tourism growth, Icelanders are cashing in through Airbnb and other short-term rental sites. In central Reykjavík more than 100 flats are available on the capital’s main street alone.

Tourism now accounts for 34% of Iceland’s export revenues, compared with 18% in 2010. The director of the Icelandic Tourist Board says the legislation is not an attempt to ban Airbnb, because many tourists preferred that experience to hotels.

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