The boat capsized in the early hours of the morning with an unknown number of passengers onboard, Tanga regional police commander Benedict Wakulyamba told Reuters by telephone, MANA correspondent reported.
The vessel was en route from Tanga in mainland Tanzania to Pemba, an island in the Zanzibar archipelago in the Indian Ocean.
"Twelve bodies, among them five men and seven women, have already been recovered," said Wakulyamba, adding that 27 people had been rescued so far in a continuing rescue operation.
Police were still trying to establish how many people were onboard the motorized boat when it went under, which witnesses blamed on powerful waves, the commander said.
In 2011, at least 19 people drowned after two overloaded boats capsized and were swept away in high seas off Tanzania's Indian Ocean coast near the same site of Tuesday's accident.