Movie downloads, games and e-books bought from overseas will have the GST applied under new laws proposed by the government.
Treasurer Joe Hockey will release a draft of the new laws - dubbed the "Netflix tax" - when he unveils the federal budget on Tuesday night.
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Mr Hockey said it was unfair that a supplier of digital products in Australia has to charge GST and an offshore supplier does not.
He said the companies themselves were agreeable to the idea.
"They actually don't pay it - it's a tax that is collected and they remit it back to the country where that occurs," Mr Hockey said.
The move, if legislated, is expected over the next four years to raise $350 million, all of which will go to the states and territories.
Japan, Norway, South Korea, Switzerland and member countries of the European Union have either introduced similar laws or are looking at them.
Alex Malley, chief executive of CPA Australia, said Australian companies were currently at a competitive disadvantage.
"We see this is an overdue levelling of the playing field," he said.
"This is about enabling Australian companies to compete internationally, grow their business and employ more Australians."
Some digital download services such as Apple's iTunes and Google's Play already charge a GST equivalent.
However the move could capture new online services such as Airbnb, Uber and Netflix.
The Australian National Retailers Association, which represents both online and traditional retailers, said it was a step towards ensuring similar types of goods and services consumed domestically are taxed in the same way, no matter how the purchase occurs.
Shane Crockett, from advisory firm William Buck, said the GST move would not make struggling businesses more competitive.
"Businesses that are struggling with overseas competition need to look at their business model, not look to the tax system for a quick fix," he said.
Mr Crockett said if the move went ahead Australia needed to work closely with other countries to ensure businesses with significant online sales to overseas customers were not impacted.
"A real concern is that we reach a stage were each country has its own unique approach to taxing online transactions," he said.
"Australian businesses may end up incurring significant compliance costs determining and managing their tax position in numerous countries."
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