Virtue HK Ltd (VHKL) was incorporated in Hong Kong and carries on a business of distributing dairy products in both Hong Kong and mainland China. For the mainland China market, VHKL has purchased a small office in Shanghai where goods are displayed for promotion purpose. VHKL and Action China Ltd (ACL), a related company of VHKL in mainland China, have entered into a service agreement under which ACL is responsible for rendering sales services to VHKL, attracting business and negotiating with customers in mainland China for VHKL. ACL frequently accepts sale orders for and on behalf of VHKL in mainland China, emailing the accepted orders to VHKL for further processing. VHKL purchases products from suppliers located in European countries. Purchase orders, trade financing and marketing works are handled by VHKL in Hong Kong. The purchase has been regarded as effected in Hong Kong by the IRD. VHKL has made arrangements to send marketing managers to provide training to ACL's staffs at various hotels in Shenzhen for a servicing fee of RMB2 million. The following table shows the servicing period of the marketing managers in relation to the training services. Mr. A Mr. B 1 January 2023-30 June 2023 25 June 2023-2 July 2023 Required: In the context of the China and Hong Kong Avoidance of Double Taxation Agreement, analyze and comment a) Whether VHKL constitutes a permanent establishment (PE) in mainland China in relation to its office in Shanghai and comment its tax position in the mainland China. (15 marks) b) Whether VHKL constitutes a PE in mainland China in relation to service agreement with ACL in mainland China and comment its tax positon in mainland China. (9 marks) c) Whether VHKL has a PE in mainland China in relation to its training services provided and comment its tax positon in mainland China. (11 marks) Hint: Your answer is expected to cover (i) type of PE identified and how to determine the identified type of PE exists (ii) what will be the tax implications. (The computation of tax payable is not required).