Businesses are being advised to ignore a letter from a firm with an address in Hamburg, Germany which is headed 'UK Data Control Scotland Business'.
The letter is designed to look like an official Government document, and requires the recipient to provide their VAT Registration Number to update the 'UK-DATA CONTROL portal'.
The letter also includes a form for businesses to check and sign to say their details are correct.
The small print indicates that a cost of £790 a year will be incurred by the business for a minimum of three years.
Emlyn Jones, Public Protection Manager for Denbighshire Council said: "We are concerned that local businesses may believe the letter to be from an official government source, which is not the case.
"If businesses sign and return the form to confirm their details are correct they could end up being tied into a contract and liable for the high costs of an entry in this portal.
"We have had several enquiries from businesses regarding this and we have advised them that they are not obliged to provide the information to this company."
* Any business concerned about a letter, email or phone call they have received can report it to Action Fraud on 0300 123 2040.
Any consumer who wants to report a scam should Citizens Advice consumer service on 03454 04 05 06, for the Welsh language service call 03454 04 05 05, or alternatively report it to Action Fraud on 0300 123 2040, to help stop it happening to others.