1. Background
Gate Price System of Japan ("差額関税制度") is a regulation on importing to Japan introduced in 1971. Purpose of the regulation was to avoid flood of cheap foreign products and to prevent extreme price fluctuation.
Theoretically the regulation can be applied to every imported goods which are less competitive comparing foreign competing products. However the only goods that falls into the coverage of the regulation is pork. Therefore current Gate Price System is known as the regulation dedicated to protect Japanese pork producers from foreign pork.
The Gate Price System levies pork importers custom duty tariff, i.e. import tax. The tax is calculated based on the import price of the pork. The importers who import pork below "criteria price" ("基準価格") have to pay the difference between import price and the criteria price as the import tax. On the other hand, when importers import pork above the criteria price, importers have to pay 4.3% of the import price as the tax. Current criteria price for subprimal or dissected pork ("部分肉") is JPY 546.53 per kilogram.
For example, if an importer imports 1 kg of pork for JPY 300, it has to pay JPY 246.53 as the import tax.
Below link is the brief explanation by Ministry of Agriculture, Forestry and Fisheries of Japan.
http://www.maff.go.jp/j/study/yoton_yokei/yoton_h17_1/pdf/data9-1.pdf
2. Widespread Tax Evasion
As is always the case when regulations distort free market, the Gate Price System also accompanies fraudulent activities. Popular fraud is to reduce the import tax by preparing fake invoice. As mentioned above, when the import price is JPY 300 the tax is JPY 246.53. So the importer make forgery invoice that state higher import price, say JPY 500, and you can reduce tax payment with little effort.
The pork which imported without proper tax payment are called "裏ポーク" or "backdoor pork."
The backdoor pork tax evasion is hard to detect especially when the pork importer conspires with the exporter. While many pork importers are prosecuted and convicted for committing tax evasion every year, it is said those convicted are only a small part of the total number.
Akahata, the largest left wing newspaper in Japan, reported even the major meat processing companies were involved in fraudulent practice.
http://www.jcp.or.jp/akahata/aik4/2005-04-25/14_01_0.html
3. Investment Scam -"Backdoor Pork" Investment
As you see, importing and wholesaling of "backdoor pork" is lucrative business as far as you are not detected by investigative authorities. Some white-collar criminals exploit that notion. They solicit potential investors who know the scheme of "backdoor pork" to invest in their "highly confidential" backdoor pork business. But usually the business is set up only to defraud potential investors. When the investors wire their fund the criminals disappear.
Keiten, one of right wing web news media, reported a president of an advertisement company which did business with listed ticket agency called "Lawson Entermedia," was deceived by such "backdoor pork investment" and lost JPY 3 or 4 billion. What is interesting is the lost money had illegal origin too. The president of the advertisement company had colluded with officers of Lawson Entermedia and embezzled JPY 11 billion from its parent company, convenience store operator called "Lawson."
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