Reform in Motion: What Pakistan’s New Budget Means for Startups
Reform in Motion: What Pakistan’s New Budget Means for Startups
By NIC Peshawar | June 2025
Pakistan’s Federal Budget for FY 2024–25 signals a clear push toward formalizing the economy, digitizing compliance, and broadening the tax base. For the country’s growing startup ecosystem, these reforms present both new opportunities and significant challenges.
At NIC Peshawar, we work with startups across diverse sectors—from fintech and healthtech to e-commerce, edtech, and clean energy. While we acknowledge that fiscal reform is essential for long-term economic stability, it must be implemented with a deep understanding of early-stage realities. Most startups are still validating their models, managing limited cash flow, and navigating the complexities of growth. Adding tax and regulatory obligations to this mix, without sufficient support, can feel overwhelming.
A key feature of this year’s budget is the emphasis on documentation and compliance. Startups are now expected to register early, maintain structured financial records, and transition fully into the formal tax system. The use of AI-driven audits and digital tracking is intended to increase transparency and reduce revenue leakage—a necessary step toward a more accountable economy.
However, this shift also increases operational pressure on startups. The introduction of broader tax obligations—such as expanded GST coverage and stricter income and withholding tax enforcement—will require startups to reorganize their financial systems and allocate resources toward compliance. For founders operating on razor-thin margins, this could significantly limit growth, especially in the absence of startup-specific tax breaks or simplified filing processes.
One of the most pressing concerns is the unequal playing field startups face when competing with the informal sector. Many small businesses operate without registration, taxation, or reporting requirements—enabling them to undercut prices and avoid regulatory costs. If formalization is not applied uniformly, compliant startups may be penalized for doing the right thing. Bringing unregulated players into the fold is essential—not just for fairness, but for the health of the entire entrepreneurial landscape.
Despite these challenges, the reforms also offer long-term benefits. A documented, transparent economy can attract more institutional investors, enable global partnerships, and position startups for scalable, sustainable growth. The budget’s emphasis on digital payments and export facilitation could especially help tech-enabled businesses with cross-border ambitions.
But for this transition to succeed, startups must be supported. This means introducing startup-friendly tax regimes, one-window digital portals for compliance, and practical training in legal and financial literacy. Capacity building must go hand-in-hand with regulation to ensure that founders aren’t left behind.
At NIC Peshawar, we’ve supported over 200 startups through every stage of the entrepreneurial journey. Our experience tells us that startups are ready to formalize—they simply need the right tools, guidance, and time. As we move into this new fiscal year, our focus remains clear: to help founders not just comply, but thrive within a more structured system.
This budget may mark the end of informality for many ventures—but it also opens the door to a stronger, more transparent startup economy. With patience, policy alignment, and targeted support, this shift can build a foundation where innovation and accountability grow together.