Tourism is one of the key economic branches in Croatia and represents a significant source of income for the state budget. Therefore, it is important to investigate how the tax system affects tourist consumption and the competitiveness of tourist destinations in Croatia. The aim of this paper is to analyze the impact of tax benefits on tourism and the competitiveness of Croatian tourist destinations. The paper will analyze the tax rates in the tourism industry and investigate how they affect tourist consumption in Croatia compared to other countries in Europe. It will also be analyzed how the tax system affects the competitiveness of tourist destinations in Croatia and how they cope with competition in other countries. Examples from practice will be used in the research, and special attention will be paid to tax incentives and their impact on the development of the tourism industry in Croatia. In addition, existing tax problems in tourism will be analyzed and recommendations for their solution will be given. As a result of this research, it will be possible to determine how the tax system affects tourism and the competitiveness of the Croatian tourist destination, and recommendations will be made for improving the tax system in the tourism industry.