UPDATE 1-Argentina taxman holding up major gold mine: Chile

(Updates with Barrick comment)

By Pav Jordan

SANTIAGO, Aug 18 (Reuters) - It is Argentina's taxman, and no longer environmental or terrain issues, that is holding up development of Pascua Lama, one of the world's last known mega-gold finds, neighboring Chile charged on Monday.

Pascua Lama straddles a shared border in the Andes at about 5,500 meters (18,000 feet) above sea level, and holds a treasure trove of some 17 million ounces of gold and one of the world's largest deposits of silver as well.

The project, owned by Canada's Barrick Gold Corp (ABX.TO), overcame years of environmental challenges after Barrick agreed to leave nearby glaciers untouched, only to run into a tax dispute by the host countries.

"Now it's up to (Argentina's tax) Treaty Commission to call a meeting to discuss and reach a solution," Chile Mine Minister Santiago Gonzalez told journalists in Santiago.

"We, Chile, as a country, want this project to happen."

Chile gave the project the green light months ago.

Gonzalez said Chile sent proposals to Argentine counterparts for a potential solution to disagreements about how to divide tax take from the project, but was still awaiting a response.

Chile and Argentina have agreed to tax profits on the gold and silver from Pascua Lama depending on what side of the border it comes from.

But they are still discussing how to tax what they call transborder services, or services rendered by individual companies to the project on either side of the border.

For Barrick, the Pascua Lama property is far too valuable for the company to be deterred by the delays and said it was also still waiting on some secondary permits in Argentina.

"It's not the kind of project you shelve because of the extra time and energy it has taken to get it permitted and expedited," Barrick spokesman Vince Borg said from Toronto.

Mine construction in the Andes mountains has a narrow window of activity because it needs to occur in the Southern Hemisphere summer, which starts around September and runs through the following February.

Construction is already years behind the earliest hopes of Canada's Barrick, the world's largest gold miner.