Pakistan must place tax clarity, lower rates, and simplified compliance at the center of its fintech strategy if it wants to compete regionally, the Asian Development Bank said in a new regional assessment.
In its latest report, Unlocking the Potential of Fintech in Central Asia, the ADB said Pakistan has strong potential to use financial technology to expand inclusion and stimulate economic growth, but warned that tax complexity and compliance costs remain among the most serious structural barriers facing the sector.
According to the report, Pakistan should reform its tax framework for fintech firms by clearly defining tax obligations, introducing targeted reductions, and streamlining procedures through digital and online filing systems. The bank said uncertainty around taxation discourages innovation, increases compliance risks, and raises entry barriers for startups and smaller firms.
The ADB stressed that closer coordination between the Federal Board of Revenue, the State Bank of Pakistan, and the Securities and Exchange Commission of Pakistan is essential to align fiscal and regulatory oversight. Without institutional coordination, the report warned, fintech firms face fragmented rules that slow scaling and raise operational costs.
Beyond taxation, the bank called for a fintech-specific regulatory framework that reflects the diversity of digital financial business models. It recommended differentiated licensing categories and proportional fees linked to firm size and risk profile, arguing that a one-size-fits-all approach discourages innovation and limits competition.
On financial inclusion, the report said Pakistan should simplify licensing for innovative products and offer clearer regulatory guidance and technical support. Grants, funding mechanisms, and structured capacity-building programs were identified as practical tools to accelerate innovation, expand access to finance, and strengthen market competitiveness.
The ADB noted that Pakistan currently lags behind several regional peers on key fintech indicators, largely due to institutional and human-capacity constraints. It recommended investments in fintech education, academic partnerships, digital literacy, specialized training for policymakers, and stronger research collaboration to close the gap.
The report also emphasized deeper regional cooperation within the Central Asia Regional Economic Cooperation framework. Cross-border investor forums, joint initiatives, and a focus on underserved and remote populations were highlighted as critical to advancing both financial and digital inclusion.
While acknowledging Pakistan’s recent progress, the ADB said sustained technical assistance and coordinated reform will determine whether the country can fully harness fintech’s disruptive potential and emerge as a regional leader rather than a laggard.
