The World Bank Pakistan Economic Policy team’s ongoing engagement on fiscal policy supports the Government of Pakistan in strengthening revenue mobilization, improving the quality of tax policy, and enhancing the institutional architecture that underpins evidence based fiscal management. As part of this engagement, the World Bank will provide targeted technical assistance to the newly established Tax Policy Office (TPO) within the Ministry of Finance. The creation of the Tax Policy Office represents an important step in separating tax policy from tax administration and in placing policy formulation, analysis, and coordination on a stronger institutional footing.

A central element of the World Bank’s support will focus on strengthening the analytical and data foundations of the TPO through targeted technical assistance. The aim is to build institutional capacity within the TPO to undertake timely and rigorous assessments of tax policy options as well as in the preparation of a medium- and long-term revenue strategies. Over time, the TPO is expected to become largely self-sustaining in technical analysis, reflecting the World Bank’s broader goal of fostering strong, independent public institutions in partner countries.

The technical support primarily consists of capacity building for TPO staff through the dissemination of best practices on tax policy design and formulation. This involves helping the TPO staff:

·       Identify policy objectives: e.g., raising revenue, promoting equity, or encouraging certain behaviors.

·       Design the tax base: determining what is taxed (income, consumption, property, etc.).

·       Set the rate structure: deciding how much to tax and whether rates are flat, progressive, or tiered.

·       Assessing administrative feasibility: ensuring the tax can be implemented efficiently.

To implement this, technical assistance will also include the maintenance, and where needed, the building of tax models in close partnership with the TPO to maximize knowledge transfer. Tax models will cover all the major taxes and includes tax micro simulation models, revenue forecasting models, tax-gap models, tax expenditure models and other analytical tools that are essential for evaluating the distributional, fiscal, and economic impacts of tax reforms.

To deliver this support effectively, the World Bank intends to contract a qualified firm that can provide just-in-time technical assistance to the Tax Policy Office. The firm will work closely with the World Bank team and the Government with designing the capacity building as well as establishing the modeling infrastructure, strengthen the underlying data and institutional arrangements, and build a sustainable foundation for self-sustaining analytical capacity within the TPO within the broader Ministry of Finance of Pakistan. The selected firm must be capable of responding promptly to ad-hoc requests and adapting effectively to rapidly changing circumstances on the ground.

World Bank Pakistan: Technical Assistance Support for Tax Modelling and Capacity Building

1. Background

The World Bank Pakistan Economic Policy team’s ongoing engagement on fiscal policy supports the Government of Pakistan in strengthening revenue mobilization, improving the quality of tax policy, and enhancing the institutional architecture that underpins evidence based fiscal management. As part of this engagement, the World Bank will provide targeted technical assistance to the newly established Tax Policy Office (TPO) within the Ministry of Finance. The creation of the Tax Policy Office represents an important step in separating tax policy from tax administration and in placing policy formulation, analysis, and coordination on a stronger institutional footing.

A central element of the World Bank’s support will focus on strengthening the analytical and data foundations of the TPO through targeted technical assistance. The aim is to build institutional capacity within the TPO to undertake timely and rigorous assessments of tax policy options as well as in the preparation of a medium- and long-term revenue strategies. Over time, the TPO is expected to become largely self-sustaining in technical analysis, reflecting the World Bank’s broader goal of fostering strong, independent public institutions in partner countries.

The technical support primarily consists of capacity building for TPO staff through the dissemination of best practices on tax policy design and formulation. This involves helping the TPO staff:

1. ·   Identify policy objectives: e.g., raising revenue, promoting equity, or encouraging certain behaviors.
2. ·       Design the tax base: determining what is taxed (income, consumption, property, etc.).
3. ·       Set the rate structure: deciding how much to tax and whether rates are flat, progressive, or tiered.

·       Assessing administrative feasibility: ensuring the tax can be implemented efficiently.

To implement this, technical assistance will also include the maintenance, and where needed, the building of tax models in close partnership with the TPO to maximize knowledge transfer. Tax models will cover all the major taxes and includes tax micro simulation models, revenue forecasting models, tax-gap models, tax expenditure models and other analytical tools that are essential for evaluating the distributional, fiscal, and economic impacts of tax reforms.

To deliver this support effectively, the World Bank intends to contract a qualified firm that can provide just-in-time technical assistance to the Tax Policy Office. The firm will work closely with the World Bank team and the Government with designing the capacity building as well as establishing the modeling infrastructure, strengthen the underlying data and institutional arrangements, and build a sustainable foundation for self-sustaining analytical capacity within the TPO within the broader Ministry of Finance of Pakistan. The selected firm must be capable of responding promptly to ad-hoc requests and adapting effectively to rapidly changing circumstances on the ground.

2. Objectives

The objective is to support the World Bank team in providing technical assistance to establish a technically robust and institutionally well-structured Tax Policy Office housed within the Ministry of Finance. The selected firm will provide technical assistance to both provide capacity building as well as the maintenance, and where needed, the building of a full suite of analytical tools that underpin modern tax policy work.

The assignment has two core aims. The first is to strengthen the government’s capacity to formulate evidence-based tax policies by building the analytical infrastructure necessary for consistent assessment of tax policy options. This includes tools and systems for benchmarking, forecasting, microsimulation, tax expenditure estimation, tax gap analysis, and economy wide modelling of tax reforms.

The second, to provide tailored capacity building support that enables government counterparts to effectively use these analytical tools for tax policy design and evaluation. This includes giving the TPO the capacity to modify and maintain these models as needed.

3. Scope of Work

Workstream A: Technical Modeling and Analytical Infrastructure

This workstream will provide support for developing a comprehensive, modern, and fully integrated suite of tax policy analysis tools that support evidence-based fiscal decision-making. These tools, where suited, will leverage existing models built by the World Bank for the TPO. It must be emphasized that these tools should be built with the active participation of the TPO staff to maximize knowledge transfer. The firm will support:

1.  ----The development of a cross-country tax benchmarking model that enables Pakistan to compare its tax system with peer economies using indicators such as tax productivity, tax to GDP ratios, effective tax rates, compliance gaps, and distributional outcomes. The model should allow regular updates using international databases.

2.  ----A comprehensive revenue forecasting model for all major taxes, with capacity for monthly, quarterly, and annual projections based on macroeconomic drivers, elasticity methods, and policy simulations.

3.  -----Microsimulation models for personal and corporate income taxes, sales tax or GST, excises, and customs tariffs, with functionality for policy simulations, incidence analysis, revenue forecasting, and behavioral scenarios.

4.  -----Prepare a framework for the Institutional and data arrangements required to maintain these models.

Workstream B: Capacity Building and Institutional Strengthening

Workstream B will focus on capacity building for TPO staff through the dissemination of best practices on tax policy design and formulation. First, this will involve training in tax policy analysis and design for all major taxes. Second, help the TPO staff assess the revenue impact, equity, and efficiency of tax policy options. Towards this goal, Workstream B will also focus on enabling the TPO to  independently use, update, and maintain the analytical tools delivered under Workstream A. The firm will design and implement a structured capacity building program that equips TPO staff to operate all the models models. This program will include hands on training, practical exercises using Pakistan specific data, and guided simulations that mirror real policy questions faced by the Ministry of Finance. The firm will also support the creation of internal workflows, documentation practices, and quality control procedures to ensure that these tools are regularly updated and applied in the annual budget cycle.

4. Deliverables and Timeline

The assignment will begin with the preparation of a comprehensive Engagement and Technical Assistance Plan for the Tax Policy Office. This plan will specify the sequence of activities, expected timelines, responsibilities, training requirements, and coordination arrangements for the full duration of the contract. It will provide a phased approach for model development, capacity building, and the preparation of guidance materials.

It will also describe the communication protocols between the firm, the TPO, and the World Bank team, along with the schedule for missions, workshops, training sessions, and progress reviews. The Engagement and Technical Assistance Plan will be submitted within the first month and will guide the implementation of the entire assignment.

After submission of the Engagement and Technical Assistance Plan, the firm will proceed with the remaining deliverables listed below.

Main Deliverables (indicative)

The list of deliverables represents our ongoing pipeline of engagement and a selection of these will be outlined in final contracting to exclude deliverables already delivered by the World Bank at the time of signing. Firms should, however, demonstrate technical capabilities across all of the deliverables below. The firm might be asked to take over ongoing implementation of some of the deliverable below or implement WB microsimulation models already in development. The contract amount will cover full costs of the engagement including staff time and any software subscriptions required for the Government.

A)      Full suite of base model preparation

• Engagement and Technical Assistance Plan with timelines, sequencing of activities, coordination arrangements, training schedule, and an implementation roadmap.
• Cross Country Benchmarking Model together with methodology, data sources, update procedures, and a user guide for TPO analysts. 
• Revenue Forecasting Model covering major taxes with short, medium, and long term projection capability, including full technical documentation and a forecasting manual.
• Microsimulation Model Suite including models for personal income tax, corporate income tax, sales tax or GST, each accompanied by detailed documentation, coding notes, data requirements, and training sessions. The models should be built in Python programming language and have version control using GitHub.
• Tax Expenditure and Tax Gap Estimation Toolkit including the methodology, templates for annual reporting, and instructions for regular model updates.
• Excise and Customs Models for policy simulation and revenue impact.

B)   Final Synthesis Report summarizing all work completed and providing recommendations for long term institutional sustainability of the TPO.

C)      An in-country and online capacity-building program on microsimulation modelling

·       The firm will provide a total of 60 full days of support either in-country or online aimed at enabling Tax Policy Office staff to independently operate, update, and interpret the tax models to ensure continuous learning and hands-on engagement.  

·       Training will cover the full modelling workflow, including data preparation, coding and model structure, calibration techniques, incorporation of behavioural and non-behavioural responses, policy simulation scenarios, and interpretation of distributional and revenue impacts. The firm will use Pakistan-specific datasets and real policy examples to ensure that learning is directly relevant to the analytical needs of the TPO.

·       The continuous support will include in-country technical workshops, supplemented by virtual clinics, office hours, and guided problem-solving exercises. Participants will complete practical assignments that require running simulations, adjusting parameters, interpreting results, and preparing policy-ready outputs. The firm will also develop training materials, documentation, practice datasets, and troubleshooting guides that remain with the TPO for future use.

The expected duration of the assignment is from the data of signing to end-June

5. Team Composition and Qualifications

The firm should have a demonstrated record of excellence in tax policy analysis, fiscal modeling, and institutional capacity building at a level consistent with work undertaken for ministries of finance, revenue authorities, and international financial institutions such as the World Bank or IMF. The firm must show proven experience developing and operationalizing tax microsimulation models, CGE models, revenue forecasting frameworks, and tax expenditure methodologies in low- and middle-income country contexts. The firm should also possess strong capabilities in strengthening the institutional foundations required for modern tax policy units, including data governance, workflow design, and structured capacity building.

Required Technical Competencies

• Advanced tax policy expertise, including design and evaluation of personal income tax, corporate income tax, VAT or GST, excises, customs tariffs, and tax expenditures.
• Demonstrated experience developing tax microsimulation models for PIT, CIT, VAT or GST, excises, and trade taxes, including coding, data preparation, calibration, and policy simulation capability in Python programming language and version control using GitHub.
• Proven capacity in revenue forecasting, using elasticity approaches, econometric methods, policy shock adjustments, and integration with macroeconomic frameworks.
• Expertise in tax expenditure and tax gap estimation, including familiarity with RA-GAP, OECD methodologies, and national reporting standards.
• Strong statistical and econometric skills, including experience working with administrative tax data, household surveys, enterprise surveys, national accounts, and customs datasets.
• Experience designing data governance systems, including data access protocols, confidentiality and security standards, documentation procedures, and version-control arrangements.
• High-level capacity building skills, including the design and delivery of structured training programs, mentoring, and institutional strengthening for government counterparts.
• Strong CGE modeling experience, including the construction of country-specific SAMs, model calibration, policy simulation, and integration with microsimulation frameworks.

Required Team Composition and Staff Qualifications

• Senior Tax Policy Expert with at least ten to fifteen years of experience advising ministries of finance or revenue authorities and a record of work aligned with IMF or World Bank engagements.
• Microsimulation Modeling Specialists with deep expertise in tax microsimulation architecture, coding languages commonly used in these models (for example Stata, R, or Python), and hands-on experience developing and calibrating national microsimulation tools.
• Revenue Forecasting Specialists with expertise in macro-fiscal linkages, elasticity-based forecasting, econometric approaches, and integration of forecasting tools into fiscal planning cycles.

Required Institutional Experience

• Prior work with ministries of finance, tax policy units, or revenue administrations in comparable country contexts.
• A track record of delivering high-quality analytical models that have been adopted and used by governments for fiscal planning and tax policy formulation.
• Demonstrated ability to provide just-in-time technical assistance under tight policy or reform timelines.
• Experience working under the guidance of international financial institutions, including familiarity with the standards, expectations, and modeling approaches used by the IMF Fiscal Affairs Department and the World Bank.

6. Reporting and Coordination

The firm with report to the assigned TTL (World Bank Pakistan Economic Policy Unit)  for this engagement

7. Confidentiality

All information gathered during the consultancy will be treated as confidential and used solely for the purpose of this assignment. All tools and data used will follow World Bank Data Use, Privacy and Confidentiality Guidelines.