The topic of this work is taxes and their purpose. The paper places special emphasis on the corporate income tax and its role in the development of the economy. Taxes have been of considerable important since the last century as state income, and we divide them into direct and indirect. The tax is one of several forms of forced taxation imposed by the state, it has no purpose or direct benefit for the individual. By collecting taxes from citizens, the state is financing important institutions within the public sector and thereby improves the standard of living of its citizens. Therefore, if the population is not educated about the importance of taxes within the state, a greater amount of tax evasion can be expected among citizens, regardless of whether they are aware of it or not. Causally - consequently, the economy has less public revenues available, so the state's standard of living is somewhat lower. The most significant forms of taxation for the budget of the Republic of Croatia are value added tax and income tax. Due to the late introduction in 1994, in the phase of tax reform, frequent legislative changes occur in its application with the purpose of fiscal and economic effects. It serves the purpose of taxes paid by trading companies on realized profits.