Final answer:
The lower effective non-GAAP tax rate for Colgate in 2013 could be due to the exclusion of certain tax items, utilization of foreign tax credits, and strategic tax planning that differs from the standard GAAP tax rate.
Step-by-step explanation:
The question addresses the factors that led to a lower effective non-GAAP tax rate for Colgate in the year 2013 as compared to the effective GAAP tax rate. Non-GAAP measures are often used by companies to provide a clearer picture of earnings by adjusting for one-time items, non-cash expenses, or other special charges that may not be indicative of the core business performance. In the case of Colgate, specific factors that could contribute to a lower non-GAAP tax rate compared to the GAAP tax rate include the exclusion of certain non-recurring tax items, adjustments for foreign tax credits, or the effects of tax planning strategies that optimize tax obligations across different jurisdictions.
Corporations are required to disclose their effective tax rate, which reflects the average rate of corporate tax paid on the company's income. This rate considers various tax benefits that are factored into the current tax year. It's important to note that non-GAAP measures are not standardized and can vary widely between companies, making direct comparisons challenging without a full understanding of the adjustments made.