Need to add a new tax group for Customers or Vendors who should not be charged any tax.
To add a Tax Group which does NOT charge tax do the following:
Open Common Services -> Tax Services -> Tax Groups
Give your new Tax Group a Name and optionally a description (e.g. NOGST)
Do not assign any Tax Authorities to the group and no tax will be calculated. Alternatively, assign a Tax Authority but make sure Tax Class is non-taxable.
Assign Customers or Vendors to use this Tax Group so that no tax will be calculated or charged.