Can we exempt some items from tax on invoices?

If you are using the main taxes set at the project level, they apply to the final invoice amount and, therefore, you cannot exclude items from being taxable. Consider using the item level taxes (Tax 1/2/3) instead as they apply to individual items on the invoice and can be exempted at the global or project level. You can also create a phase that has no taxes applied and only log tax exempt expenses there. Check out this article for more: Taxes in BQE CORE.