The paper measures the tax compliance costs of business units that pay personal income tax in Croatia for the period 2001/2002. They comprise all taxes, except custom duties. The regressive effect is proven, measured by different size measures. In the cost structure the cost of time, predominantly the owner’s time, is predominant. Concerning the type of tax, personal income tax and VAT are, in aggregate, of almost the same importance. As a percentage of GDP the tax compliance costs come to around 0.8%. The share of personal income tax compliance costs in the relevant tax revenues is extremely high (almost 100%), which calls for the substitution of self-assessment by lump sum (estimated) tax. Psychological cost of that tax does not seem to be significant. The share of VAT is also considerable (25% or at least 16%), calling for a higher exemption threshold
