The centre back is set to be the next cab in the rank of defensive reinforcements brought to the Emirates this summer for £16m after the Gunners completed deals for both Stephan Lichtsteiner and Bernd Leno.
The 30-year-old has reportedly already undergone a medical after the two clubs came to an agreement over a deal for the defender, however the silence across official channels has led to questions over the hold up for an announcement.
According to Sheth, the delay pertains to Dortmund's tax dealings and their request to formalise the move at the start of the new financial year in Germany.
"Stephan Lichtsteiner is in, Bernd Leno is in and Sokratis Papastathopoulos will sign on July 1," he told Sky Sports' Transfer Talk, via the Express.
"The reason July 1 is because Borussia Dortmund want to announce that at the start of the new tax quarter in Germany.
"There are financial reasons which I cannot even begin to go into," he added.
Despite a limited transfer budget and having already secured a handful of new additions Unai Emery's summer business is not over yet as Sheth added: "There's also interest in the Portugal winger Gelson Martins.
"All of these transfers seem to fit Emery's profile and also what we believe to be a limited transfer budget at Arsenal. There's talk of £50m that we believe the ceiling with regard to how much Emery has to spend.
"Arsenal fans have talked about why he only has that money but you've got to remember in the last two windows, Arsene Wenger spent quite big on players that perhaps have been earmarked with a Wenger replacement in charge.
"We had Alexandre Lacazette coming in last season for close to £50m, then close to £60m for Pierre-Emerick Aubameyang. Henrikh Mkhitaryan is in too."