The 23-year-old midfielder, has been linked with a move to the Emirates and reports in England and Germany say a deal is imminent.
Arsenal will pay a fee of £30 million (€38m) but Rheinische Post reports they have had to increase their offer to an initial payment of £33.9m (€43m) plus add-ons.
Personal terms are yet to be agreed and earlier this week, Xhaka said: “What happens is not entirely down to me.”
The Switzerland international has played in 107 Bundesliga games since he joined Gladbach from Basel in 2012.
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