Can exempted be used as a verb?

No, "exempted" is the past participle of the verb "exempt." It is not a verb itself.

You can use "exempt" as a verb:

* "The government exempted small businesses from the new tax."

But you cannot use "exempted" as a verb. Instead, you would need to use a verb phrase like "was exempted" or "has been exempted":

* "The small businesses were exempted from the new tax."

* "The small businesses have been exempted from the new tax."