Tax evasion in Bosnia and Herzegovina has negative effects on the economy and society. By analyzing data from taxpayers and tax inspectors, researchers found that tax evasion damages the reputation of institutions, threatens the tax system and rule of law, and causes distrust in the tax system. However, reducing tax evasion can significantly improve public finances in the country. The study highlights the importance of addressing tax evasion to create a better economic and social environment in Bosnia and Herzegovina.