Small taxpayers belong to the category of value added tax payers. VAT is one form of sales tax and is an important instrument of the country's fiscal policy. Small taxpayers are legal entities with headquarters, a permanent business unit, or natural persons with residence or habitual residence in the country, whose value of goods delivered or services rendered in the previous or current year did not exceed HRK 300,000.00. They can enter the VAT system by "force of law", that is, if they exceed the amount of HRK 300,000.00 and voluntarily, which binds them for the next three calendar years. When small taxpayers enter the register of VAT payers, they must notify the competent office of the Tax Administration about it, and they can also submit this report in paper form only if they receive and provide services to taxpayers from third countries. In order to enter the VAT system, they must also submit an Application for registration for VAT purposes, which is also called the P-VAT form. There is also a VIES database that is important to the Tax Administration in order to detect possible tax frauds by checking the VAT identification number. As for the special procedure of taxation of small taxpayers, they may be exempt from paying VAT in domestic transactions of goods and services when they invoice other Croatian taxpayers for deliveries, however, in transactions with taxpayers from the EU and third countries, they should assume the obligation to pay VAT.