The subject of this final paper is a short description of taxation, the depiction of the tax system with an overview of the Republic of Croatia tax system and the description of the tax audit proceedings. Taxes are compulsory payments which a state takes from persons and companies without a direct and actual reciprocal service and with the aim to finance public expediture by the collected money. According to the General Tax Code, taxes are money payments and they represent the budget revenues used to cover the public expediture determined by the budget. They are not considered occasional payments. Taxes can be divided in many ways, the most common being direct and indirect taxes. There are numerous forms of taxes. Besides being the basic public revenues, taxes also are affecting the fulfilment of the numerous goals set before the economic and social politics. The basic characteristic of taxes in a modern state are: compulsiveness, derivativeness, irretrievability, lack of direct compensation, lack of a destination, taxes are collected for a public interest and they are the monetary income of a state. The tax system represents all the taxes effective in a country and it differs in different countries. The contemporary tax system is characterized by a larger number of taxes, it is part of the social-economic and political system of a country and it is conditioned by it. The Republic of Croatia tax system is a plural tax system, which means that it has more than one tax form. Regarding the tax revenues affiliation, there are the following tax groups: state, country, city or municipality and common. Tax audit are part of the fiscal-legal relation where the tax authority conducts the procedure of assessing and determining the facts significant for the taxation of taxable persons and other persons. The tax audit proceedings are conducted according to the provisions of the General Tax Code, while the mere assessment is in line with laws determining a certain type of tax. It is conducted by authorized persons from the Tax Administration. Besides the Tax Administration, the taxable person, or any person determined as such by the low regulating a certain type of tax, is also a participant in the tax audit. The taxable person has to take part into the tax audit proceedings. After the determining the factual situation, administrative acts in the form of tax decisions have to be brought about a tax audit. A taxable person may file a complaint on the minutes made which precedes the tax decision to which appeals may be submitted. A tax decision is also reached when there are no determined irregularities in the inspection proceeding, but not for the inspection of fiscalization in cash sales. Since the possibility of reassessing the state authority decisions is guaranteed by law, there are legal remedies anticipated by Croatian positive legal regulations which taxable persons have at their disposal.