ADB Report Calls for Tax and Regulatory Reforms to Accelerate Fintech Growth in Pakistan

Pakistan must undertake comprehensive tax and regulatory reforms to accelerate fintech growth and position itself as a regional competitor, according to the Asian Development Bank’s (ADB) latest assessment.

In its report, Unlocking the Potential of Fintech in Central Asia, the ADB said Pakistan has strong potential to expand financial inclusion and support economic growth through digital financial services. However, it warned that complex tax laws, high compliance costs, and regulatory fragmentation continue to constrain the sector’s development.

The report calls for a fintech-friendly tax regime, recommending clearer tax obligations, targeted tax reductions, and simplified compliance procedures, including online filing mechanisms. It also highlights the need for greater tax awareness through training programs, incubators, and academic institutions to encourage compliance within the fintech ecosystem.

Stronger coordination among the Federal Board of Revenue (FBR), the State Bank of Pakistan (SBP), and the Securities and Exchange Commission of Pakistan (SECP) is identified as critical to reducing uncertainty and improving policy implementation.

Beyond taxation, the ADB stresses the importance of an adaptive regulatory framework tailored to fintech firms. It recommends fintech-specific licensing categories that reflect differing business models and risk profiles, along with proportional licensing fees based on firm size and activity. Such measures, the report says, could lower entry barriers for start-ups while promoting competition and innovation.

The Bank also underscores the need for closer collaboration among regulators to minimize overlaps, address gaps, and create a more coherent regulatory environment. Enhanced coordination could also support regional cooperation and cross-border fintech activity.

On financial inclusion, the report urges streamlined licensing for innovative products, along with regulatory guidance, technical support, and access to grants and funding. It notes that Pakistan lags behind several regional peers on key fintech indicators and faces internal capacity constraints.

To address these gaps, the ADB recommends investments in digital literacy, fintech education, policymaker training, and research and development. Open data governance and institutional strengthening are also seen as essential for accountability and sustainable growth.

While acknowledging recent progress, the ADB concludes that sustained reforms, technical assistance, and deeper regional collaboration will be necessary if Pakistan is to close the fintech gap and fully harness the sector’s potential.

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