A Bill that imposes GST on overseas online purchases of "intangibles" such as e-books, music, videos and software has passed its first reading.
The omnibus tax Bill also puts a withholding tax on profits earned by foreign property speculators.
The property speculators measure is the third part of the Government's investment tax reforms announced in the May budget.
Under the reforms, income tax will be charged on profits made from residential properties bought and sold within two years.
The withholding tax ensures foreign speculators have to pay it, and the measure is intended to help take the heat out of the Auckland housing market.
The GST move is partly designed to create a level playing field for New Zealand businesses.
"The government needs to deal with increasing volumes of online services and other intangibles purchased from overseas suppliers," said Revenue Minister Todd McClay.
"This is an increasing challenge because of its exponential growth - the government is losing revenue and it has created an unfair playing field for New Zealand retailers."
NZ First was the only party that opposed the bill and it passed its first reading last night 109-12.
It has been sent to a select committee for public submissions.