Abstract
Shadow economy includes economic activities and the income obtained due to avoidance of taxes. Fiscal evasion is one of three main parts of shadow economy. It is a problem present almost in every country in the world. It is very largely people's desire to evade taxes that creates most of the shadow economy. First of all, this thesis focuses on the factors which affect informal economy and different forms in which it is seen. Second part of this study is about fiscal evasion and shadow economy in Albania. It is analyzed the factors which have helped in developing of informal economy in my country, by using evidences from different sources. in Albania section, it is also included a sub-section which focuses on the different ways that needs to be followed in order to fight against fiscal evasion. Shadow economy and fiscal evasion, cannot be completed eliminated, but all the countries should fight in order to reduce fiscal evasion, thus reducing the size of informal economy.
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