A bill introduced by the Labour Party-led government, which has the opposition's support and is expected to be processed quickly, limits foreign donations to 50 New Zealand dollars ($32.5), reports Efe news.
"The risk of foreign interference in elections is a growing international phenomenon and can take many forms, including donations. New Zealand is not immune from this risk," Justice Minister Andrew Little said in a statement.
The new legislation would also require candidates and parties to ensure that the donations exceeding this limit have not originated abroad.
Little said that countries such as Australia, Canada and the UK have already limited anonymous or foreign donations through legislation.
The Minister, who did not directly mention China as a potential threat, said that a recent report by the Canadian government revealed that around half of the developed democratic countries which held elections were targeted by cyber-attacks in 2018, a trend which has been growing for the last four years.
The new law would also increase requirements for releasing electoral campaign material, making it mandatory to include the name and address of the publisher on advertisements as a way to curtail the circulation of false or anonymous information.
"Anonymous online advertisements aimed at interfering with our democracy will be prohibited. If someone wants to advertise online they need to say who they are, the same as if the ad was published in a newspaper," Little said.
The measure comes amid concerns over increasing Chinese influence in the Pacific region, and allegations that Beijing has tried to spy and interfere in Australian affairs.
China has repeatedly denied the accusations, arguing that the fears are part of a "Cold War" mentality.
( With inputs from IANS )