"While the U.S. is paralysed by fears of a double-dip recession and Europe struggles with sovereign debt issues, Canada’s economy has held up better than most," the influential U.S. business magazine wrote.
Forbes noted that Canada ranked ninth among the 134 countries reviewed for tax burden compared with 23rd in the category for 2010.
The magazine said the improvement was in part because of the introduction of the harmonized sales tax last year in Ontario and British Columbia. Forbes also cited lower corporate and employee tax rates for helping business.
Corporate tax rates were a key campaign issue in the last federal election, while B.C. recently held a referendum in which people voted to repeal the HST.
In Ontario, the governing Liberals have faced criticism over the HST, with both the opposition Conservatives and New Democrats in Thursday's provincial election promising changes to the tax, saying they will remove it from certain bills.
The HST combines the provincial sales tax and federal goods and services tax.
Supporters have said the HST is a value-added tax that spurs investment and create jobs by removing levies on business inputs. HST opponents have said the HST shifts taxes to consumers from business.
Forbes praised Canadian banks for skirting the financial crisis that began in 2007.
"Canadian banks emerged from the tumult among the strongest in the world thanks to their conservative lending practices," Forbes said.
Canada was the only country to rank in the top 20 in 10 of the 11 categories considered by Forbes.
Canada beat out New Zealand and Hong Kong, which placed second and third respectively in the overall rankings. The U.S. ranked 10th, down from ninth a year ago.
Denmark, last year's winner, dropped from the top spot to fifth as its stock market fell 14 per cent.
Forbes ranked the countries based on 11 different factors including property rights, innovation, taxes, technology, corruption, freedom, red tape, investor protection and stock market performance.