Taxes are non-refundable funds that every natural and legal person pays into a state bank. The purpose of giving and collecting these funds is to finance public facilities and services used by people in one state. These facilities and services are mainly educational institutions, hospitals, public safety (which refers to the police, army, etc.), the Church, firefighters and others. Each state, according to certain factors, determines the tax system to be applied in the state, therefore no state has the similar tax system. The Republic of Croatia tax system is a relatively young system that is harmonized according to the rules of the European Union. Taxes in Croatia Republic are divided into state, county, city or municipal taxes, joint taxes, taxes on games of chance and fees for the preparation of games of chance. The characteristics of income tax consist of the elements: tax base, taxpayer, tax relief and tax rate.