In any country, there are many informal businesses (part of the underground economy), which not register with their governments and thus evade paying taxes on their profits. The owners do not see the need to do so, yet expect their government to provide public services. Apart from being a legal requirement, formalizing the business and paying taxes on its taxable profits is the decent and ethical thing to do, regardless of what other business owners are doing.
Some countries are more tolerant to informal business than others. In the United Kingdom it is an offence not to register a business, punishable by a fine, once one is discovered doing so. I am for formalising the business and the payment of taxes, which governments use to fund public service, that benefit all citizens.
To formalize your business, you should register it with the tax authorities of the country concerned, keep proper financial accounting records and prepare final accounts at the end of each trading financial period. At that point, the owner of the business or his accountant must submit those final accounts to the Revenue authorities to be assessed and pay tax on its taxable income.
Whether or not the owner decides to formalize his business by registering it with the authorities of the land, its operations must be lawful, according to the laws of the land. Failing that, depending on the nature of the offence, the owners may be prosecuted if they are found to be violating the laws of the land.