You should be able to override the withholding tax code on a PO so that they are different than the vendor defaults. Additionally, you should be able to override the withholding tax code on a PO invoice so that it is different than what is on the PO or Vendor.

For example, a vendor might provide multiple services or goods that are taxed at different rates. The logical thing to do is to put the most commonly used withholding tax code on the vendor that covers the majority of the transactions. However, in the event the vendor provides a service or good that is taxed differently, you should be able to make the override at the PO or at the Invoice.

This functionality would follow suit on how everything else in D365 Finance inherits from the master record, but can then be overridden at the transactional level. i.e. SO header can be more specific than the customer. The SO line can me more specific than the SO header, etc.