ADB Recommends Pakistan to Reform Digital Infrastructure Tax

The Asian Development Bank (ADB) has urged Pakistan to rationalize its digital- infrastructure tax framework to stimulate growth in its digital economy. In its report, Pakistan’s Digital Ecosystem, the ADB criticizes current tax rates on digital services and spectrum, highlighting that they are not only driving-up costs for providers but also deepening the digital divide, especially among women and marginalized communities.

The ADB recommends benchmarking Pakistan’s digital-service taxes against international competitors and fixing sector-specific tax rates for a 10-year period, including decoupling spectrum lease pricing from the US dollar.

A more coherent and development-oriented tax regime would allow Pakistan to harness digital transformation as a lever for economic inclusion, competitiveness, and state capacity. It would enable scalable investments in broadband infrastructure, support the emergence of indigenous tech manufacturing, and foster public–private partnerships in data governance. Thus, reforming and rationalizing the tax structure serves as a pre-requisite for building a resilient, innovation-driven digital ecosystem that acts as an engine of growth.