The legislation, which needs the approval of law-makers, is in reaction to Russia's invasion of Ukraine last February.
It also allows the defence ministry to shift funding for large acquisition projects from year to year, making it easier to run complex tenders for weaponry.
The country, like most other members of the North Atlantic Treaty Organization (NATO), has long missed a target of spending 2% of GDP on defence.
It has had a non-binding plan to meet that goal by 2025, following a series of missed targets by previous governments to raise defence budgets.
Spending on defence is forecast at 1.52% of GDP in the 2023 budget.
"We want this (2%) obligation... to be anchored in legislation," Fiala said.
"Strengthening security and defence abilities are long-term government priorities, which are important especially at this time when Russia started the war in Ukraine," he said.
According to government documents preparing the law, the change could take effect in mid-2023 and raise the 2024 budget plan by 21.5 billion crowns ($951.54 million) to reach the 2% target.
The Czech Republic, part of NATO for nearly a quarter of a century, has lifted spending on defence since the Ukraine war started, and has been one of the biggest supporters of Kyiv relative to the country's size in weapons deliveries and other aid.
The country last month signed a non-binding memorandum with Sweden for the delivery of more than 200 CV90 infantry fighting vehicles as part of efforts to modernise its military.
It has also been in negotiations with the United States to buy 24 F-35 jets.
($1 = 22.5950 Czech crowns)
(Reporting by Jason Hovet, editing by Jan Lopatka and Barbara Lewis)
