Tax frauds are a current global issue because they create problems for governments around the world, including in the Republic of Croatia. Tax avoidance is a common social phenomenon by which taxpayers, for various reasons, in a legal or illegal way, want to avoid paying it. The aim of this paper is to investigate the scope and nature of tax fraud in Croatia and to examine their effects on the country's tax system. For the purposes of writing the thesis, mostly secondary data were used, that is, data from existing sources collected from books, scientific and professional articles by Croatian authors. In addition to secondary data, the paper uses the method of data collection through a survey, i.e. directly from respondents (students, household members...). Tax frauds have a significant impact on the tax system because they undermine the integrity and fairness of the tax system and erode public trust in state institutions. When people realize that some individuals or companies are getting away with not paying their fair share of taxes, they may become less willing to comply with tax laws, which greatly affects the economic stability of the country. The line between tax evasion and tax evasion is thin, but it should be noted that it exists and that in tax evasion all "loopholes" in the law are used in order to pay less tax, while in tax evasion that law is directly violated in order to not paying tax or paying less than prescribed. It is expected that this thesis will contribute to the reduction of tax fraud and evasion in Croatia, and that taxpayers will realize the importance of paying taxes in order to increase the country's economic development, which will result in a better standard of living for all Croatian citizens.