We report on the carrier dynamic and electronic structure investigations on AlGaN-based deep-ultraviolet multiple quantum wells (MQWs) with lateral polarity domains. The localized potential maximum is predicted near the domain boundaries by first-principle calculation, suggesting carrier localization and efficient radiative recombination. More importantly, lateral band diagrams of the MQWs are proposed based on electron affinities and valance band levels calculated from ultraviolet (UV) photoelectron spectroscopy. The proposed lateral band diagram is further demonstrated by surface potential distribution collected by Kelvin probe microscopy and the density-of-state calculation of energy bands. This work illustrates that lateral polarity structures are playing essential roles in the electronic properties of III-nitride photonic devices and may provide novel perspective in the realization of high-efficiency UV emitters.