Asian Development Bank has said that clearer tax laws, lower rates, and simplified compliance are essential for Pakistan to emerge as a regional fintech leader, warning that tax complexity remains a major bottleneck for the sector’s growth.
In its latest report, Unlocking the Potential of Fintech in Central Asia, the ADB said Pakistan has significant scope to use fintech to expand financial inclusion and support economic growth, but progress will depend on addressing fiscal constraints alongside regulatory and capacity challenges.
The report recommended reforms to make the tax system more fintech-friendly, including clearer tax obligations, targeted tax reductions, and streamlined compliance procedures such as online filing. It also highlighted the need to improve tax awareness through training programmes, incubators, and academic institutions to strengthen compliance within the fintech ecosystem.
The ADB stressed that closer coordination among the Federal Board of Revenue, the State Bank of Pakistan, and the Securities and Exchange Commission of Pakistan would be critical to ensure consistency in policy and regulation.
Beyond taxation, the report called for an adaptive regulatory framework tailored specifically to fintech firms. It recommended fintech-specific licensing categories that reflect different business models and risk profiles, along with proportional licensing fees to lower entry barriers for start-ups while supporting competition and innovation.
A collaborative regulatory approach was identified as another priority, with the ADB urging stronger coordination and information-sharing among regulators to avoid overlaps, close regulatory gaps, and support innovation, while also facilitating regional cooperation.
On financial inclusion, the report said Pakistan should streamline licensing for innovative products and provide regulatory guidance and technical support to fintech firms. Grants, funding mechanisms, and structured capacity-building programmes were highlighted as tools to accelerate innovation and expand access to finance.
The ADB noted that Pakistan trails several regional peers on key fintech indicators and warned that internal capacity constraints could continue to slow progress. It recommended investments in education and skills, including fintech-focused academic courses, improved digital literacy, specialised training for policymakers, and stronger research and development collaboration. Open data governance and institutional strengthening were also identified as important for accountability and long-term growth.
The report further emphasised the need to deepen regional cooperation within the CAREC region through investor meetings, conferences, and joint initiatives, particularly to extend digital financial services to underserved and remote populations.
While acknowledging some progress, the ADB said sustained reforms, technical assistance, and closer regional collaboration would be necessary for Pakistan to close the fintech gap and fully realise the sector’s potential.
