For what type of rental does the LAU lease specifically not allow VAT on rent?

The LAU lease, which stands for the Lebanese Rental Act, specifically prohibits the application of Value Added Tax (VAT) on rent for residential long-term housing. This is due to the intention of the law to protect tenants in residential situations, ensuring that housing remains affordable and accessible without the added burden of VAT. Residential long-term leases are typically designed for tenants who are seeking stability and security in their living arrangements, which can be jeopardized if additional taxes are imposed on rent.

In contrast, vacation rentals, commercial leases, and short-term leases may be structured differently and are more likely to be subject to VAT. These types of rentals cater to a market that can absorb additional costs, given their temporary or business-oriented nature. Therefore, the exemption of VAT for residential long-term housing reflects a policy choice aimed at safeguarding the interests of tenants in stable living conditions.